Risk management is the process of identification and evaluation of potential risks that a business may face in terms of existence, profits and reputation. These risks can be controlled by using effective risk management tools and techniques. One of such tools used is, risk management software. In a business assessing the risks and opportunities will have a major effect on the implementation of new strategies and completion of projects and individual tasks. It is also difficult for a business to prioritize the tasks to reduce risks. Risk management software helps to solve above said problems and also identifies low priority jobs from high priority ones.
There are two main factors which determines the level of risk, one is the probability of the chance that a particular adverse circumstance will come about and the other one is the cost, which is the price the business have to pay if an adverse event occurs. The risk management software is used to balance these two factors and suggest the best course of action. The ideal management of risk is one which allocates few resources possible and reduces risks by the maximum amount.
There are four main ways to reduce the risk, which are risk avoidance, risk reduction, risk retention and risk transfer. Risk management software helps the business to take decisions on the above four forms of the risk reduction and it can also show which risks are more important and how likely they are to occur. With the use of Monte Carlo analysis, the risk management software can also determine the likely cost of the risk if it occurs.