Risk, in insurance term, is the possibility of a loss or other adverse event that has the potential to interfere with an organization's ability to fullfill its mandate, and for which an insurance claim may be submitted.

Risk management ensures that an organization identifies and understands the risk to which it is exposed. Risk management also guarntees that the organization creates and implements an effective plan to prevent losses or reduce the impact if a loss occurs. 

Risk management provides a clear and structured approach to identifying risks. having a clear understanding of all risks allows an organization to measure and prioritize them and take the appropriate action to reduce losses.