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Risk management is the practice of identifying, assessing, and controlling risks.

Its purpose is to ensure that the organisation understands and effectively manages risks related to its objectives.

Risk management helps organisations balance risk and opportunity.

Risks may arise from uncertainty and can have positive or negative effects.

Risk management should be integrated into all organisational activities and decision-making.

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2. How This Applies to TakeCars (Car Rental Marketplace)

Risk management is core operating logic for a marketplace, even if it is never formally labelled as such.

a) What “risk” looks like at TakeCars

Typical risks include:

• Host cancellations
• Vehicle breakdowns
• Fraud or identity misuse
• Insurance gaps
• Payment failures
• Regulatory or consumer law exposure
• Reputational damage from bad trips

Each risk threatens outcomes, warranty, or trust.

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b) Identifying, assessing, and controlling risks

Identify

• Where trips fail
• Where disputes occur
• Where support escalations cluster

Example:

• Repeated last-minute host cancellations in one city

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Assess

• Likelihood (how often does this happen?)
• Impact (how bad is it when it happens?)

A rare breakdown is different from frequent cancellations.

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Control (treat)

Risk treatment options in TakeCars:

• Prevent
  • Host vetting
  • Mandatory instructions
• Reduce
  • Deposits
  • Backup vehicles
• Transfer
  • Insurance
• Accept
  • Low-impact edge cases

ITIL does not require eliminating all risk.

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c) Balancing risk and opportunity

Avoiding all risk would mean:

• No new hosts
• No new cities
• No flexibility

Taking unmanaged risk leads to:

• Support overload
• Trust collapse

Risk management exists to balance, not block, growth.

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d) Exam-critical insight

If the exam asks:

“What is the purpose of risk management?”

Correct logic:

• Identify, assess, and control risks
• Support achievement of objectives
• Balance risk and opportunity

Answers implying “eliminate all risk” are incorrect.

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3. Key Things to Read / Remember Right Before the Exam

Risk management (high probability)

• A general management practice
• Identifies, assesses, and controls risk
• Supports objectives
• Balances risk and opportunity

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Common exam traps

• Risk management removes all risk → False
• Risk management is reactive only → False
• Risk management applies only to threats → False

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One-line memory hook

Risk management balances uncertainty and opportunity to protect objectives.

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