Risk Management

Risk management is the process of identifying, assessing, and controlling threats or risks that could negatively impact an individual, organization, or project. The goal is to minimize the potential losses or harm by planning how to handle uncertainties effectively.

In finance or trading, for example, risk management involves strategies to limit potential losses—such as setting stop-loss orders, diversifying investments, or controlling position sizes—so that even if the market moves unfavorably, the damage is limited.

Risk management is crucial for capital preservation and achieving long-term objectives. Even the top global financial institutions prioritize it above all else.