Risk management involves recognizing risks, assessing them, developing strategies to manage risks, and mitigating risks using resources. Key strategies include transferring risk to another party, avoiding risks, reducing the negative effects, or accepting some consequences. Traditional risk management addresses physical and legal risks like disasters, fires, accidents, and lawsuits. Ideal risk management prioritizes the greatest losses and profits to handle risks in descending order. The objective is to reduce risks to a level accepted by society.