If risk management was simply a matter of identifying and fixing problems, then countless businesses might be more secure. There wouldn’t be any need to write books on the topic. The most critical step of risk management, however, is measuring and assessing risk. This process is part art and part science, particularly for certain risk categories. Consequently, measurement and assessment is the most difficult aspect of risk for most people to grasp, and it is also the aspect that feels the most unnatural to a normal business flow.

Risk measurement and assessment grabs all the headlines and cameras when the media asks about troubled companies. We’ve all heard reporters ask these questions: “Did their risk models fail?” “What risk measures were taken?” “Did they pass the stress test?” This is the aspect of risk we hear most about when a financial crisis grips the globe or a company is in serious trouble.