There are four steps in the risk management process (see Exhibit 3.1):
Step 1: Identify loss exposures.
Step 2: Measure and analyze the loss exposures.
Step 3: Select the appropriate combination of techniques for treating the loss exposures.
Step 4: Implement and monitor the risk management program.
Each of these steps is discussed in some detail in the sections that follow.
The first step in the risk management process is to identify all major and minor loss exposures. This step involves an exhaustive ...