What does risk management in financial management aim to achieve?

Risk management in financial management aims to identify, assess, and mitigate financial risks, which is fundamental in safeguarding an organization's assets and ensuring financial stability. This process involves recognizing potential risks that could negatively impact financial performance, whether they are related to market fluctuations, credit issues, liquidity problems, or operational challenges.

Once these risks are identified, organizations assess their potential impact and likelihood, which helps in prioritizing efforts and resources to manage them effectively. The mitigation part involves developing strategies to minimize the likelihood of these risks occurring or to lessen their impact if they do occur.

Through this structured approach, risk management not only protects the organization from potential losses but also enables informed decision-making and strategic planning, ensuring that the organization can achieve its financial objectives while maintaining stability and resilience in the face of uncertainties.

Other choices, such as increasing revenues or balancing the budget, do not specifically encompass the comprehensive and proactive nature of risk management, which is focused on understanding and managing uncertainties that can affect the financial health and operational effectiveness of an organization.