2.2 What is risk management?
As individuals and as a society we constantly respond to risk, often without even realising
it. Sometimes we do respond to it consciously, but we don’t always do it systematically.
The purpose of risk management is to apply a process to identify risks, set an acceptable
level for risk, and take steps to keep residual risk at that level.
How we decide what is an acceptable level is influenced by legal standards, our personal
risk tolerances and societal views. Legal standards are established in legislation (such as
the Health and Safety in Employment Act 1992) and in common law (also known as
judge-made law) through lawsuits brought by people when things go wrong. An individual’s
risk tolerance is the level of risk that he or she is willing to take considering the opportunity
at hand.