Financial Risk Management and Its Importance To Financial Managers

Abstract

Risk management is a systematic approach that involves the identification, analysis, and subsequent acceptance or mitigation of uncertainties associated with investment decisions. The relationship between risk and return is inherent in the realm of investments. Risk management techniques encompass several approaches, including as avoidance, retention, sharing, transferring, as well as loss prevention and reduction. One strategy for evaluating risk involves utilizing the concept of standard deviation, which serves as a statistical indicator of the extent to which data points deviate from the mean.