RISK MANAGEMENT

FOREWORD

In the American culture, risk is the pathway to success,a quick means to achieve the American Dream. Quick success has become the all consuming goal in America and the "failure consideration" of risk has become a minor concern. As a result management decisions are often based more on luck than on good judgment. A thorough understanding of risk management is needed to turn business enterprise from a gamble and depression to an investment and stability.

RISK MANAGEMENT

A risk is a venture into the unknown. Without risk, we would never go anywhere or learn anything new.

Risk brings gain and it brings loss. The greater the risk, the greater the possible gain; AND the greater the possible loss.

We take risks most of the time. We take a risk whenever we walk across the street or drive a car. If there are no cars coming, the risk in crossing the street is minimal (The gain is to reach the other side, the loss would be an accident that prevented one from reaching that goal) If the street has high speed traffic, the risk would be greater. If a car is driven on a crowded highway at legal speed, the risk may be small. If the car is driven on a crowded highway above legal speed with faulty brakes, the risk may be great. Steps can be taken to reduce risks. One might reduce the risk of financial loss, for example, by purchasing accident insurance.

In any action involving risk, all conditions should be considered and weighed; and a decision should be taken to determine the action that is to be taken. This assessment and decision is called RISK MANAGEMENT.

In our democratic, free business enterprise system, risk is the key element. Proper management of the risk increases the possibility of gain and decreases the possibility of loss.
Success to some extent also depends upon luck. Luck is the element over which we have no control.
However, it has been wisely said that the better the risk management, the better the chances for good luck. A risk taken based solely on luck is a gamble. Risk based upon proper risk management is called an investment.

Our Free Business Enterprise system is based upon Supply and Demand. Since it is a Free system,
demand is unknown and consequently Free Business Enterprise System is a system based upon risk.