Organizations face external and internal factors and influences that make it uncertain whether they will achieve their objectives. Risks underlie every business, some known and some unknown. Managing risk is vitally important and assists organizations in setting strategy, achieving objectives and making informed decisions. Managing risk is part of governance and leadership, and is fundamental to how the organization is managed at all levels. Risk management should be integrated with the entire business and cover all levels within organisations.

Managing risk considers the external and internal context of the organization, including human behaviour and cultural factors. Formal Risk Management uses 11 principles which can develop an effective risk management framework. A well implemented risk management helps avoid failures of businesses