What is the first step in the risk management process?

Establishing the context of risk assessment is crucial because it sets the framework for the entire risk management process. This initial step involves understanding the environment in which the organization operates, defining the scope of risk assessment, and determining the criteria for evaluating risks. By doing this, businesses can identify the specific goals, objectives, and stakeholder expectations relevant to the risk assessment.

Establishing context allows organizations to tailor their approach to risk management based on their unique circumstances, such as industry regulations, operational frameworks, and external factors. It ensures that subsequent steps, such as identifying possible risks and assessing their severity, are aligned with the overall strategy and objectives of the organization. This foundational understanding not only provides clarity but also facilitates effective communication about risks across the organization.