What type of risks does risk management primarily focus on?

Risk management primarily focuses on financial and operational risks because these categories encompass the potential losses or failures that can significantly impact an organization's performance and sustainability. Financial risks refer to uncertainties related to financial assets or transactions, which could lead to significant monetary loss. Operational risks, on the other hand, are linked to the everyday functions of an organization, including processes, systems, and personnel. Managing these risks is crucial for maintaining business continuity, improving efficiency, and safeguarding assets.

By identifying, analyzing, and prioritizing these risks, organizations can implement strategies to mitigate their impact. Addressing financial and operational risks directly correlates with enhancing organizational resilience and achieving strategic goals. Other types of risks like social, environmental, developmental, and marketing risks can be relevant but do not constitute the primary focus of risk management in most organizations, where financial stability and operational efficiency are foundational to success.