What does risk management involve in a business context?

Risk management in a business context involves a systematic approach to identifying, assessing, and mitigating potential risks that could adversely affect the organization's operations, assets, or reputation. By focusing on identifying and mitigating risks, businesses can develop strategies to minimize the likelihood of negative events occurring and lessen the impact if those events do occur.

This process is essential for maintaining stability and ensuring that a business can continue to operate effectively in the face of uncertainties. It includes evaluating both internal and external factors that could pose risks, such as market fluctuations, operational hazards, regulatory changes, and more. By actively managing risks, organizations can make informed decisions, allocate resources more strategically, and enhance their resilience against unforeseen challenges.

The other options do not align with the comprehensive approach that effective risk management entails. For instance, attempting to eliminate all potential risks is neither feasible nor practical, as risks are an inherent part of business operations. Similarly, increasing competitive pressure and documenting every decision do not directly relate to the core objectives of risk management; rather, they represent different aspects of business strategy and operations that may not necessarily contribute to managing risks.