In any business endeavour, risk management strategy may:

• deliver greater confidence and rigor around decision-making processes and planning
• enhance the identification of opportunities and threats
• gain value from uncertainty and variability.

It is critical that the risk management strategy is relevant to the business activities to which it will be applied. To ensure this relevance, it is important to consider the external environment in which the business operates. This may, for example, include:

• the business, social, regulatory, cultural, competitive, financial and political environment
• the business' strengths, weaknesses, opportunities and threats
• external stakeholders
• key business drivers.
  

It is particularly important to take into account the perceptions and values of external stakeholders and to establish policies for communication with these parties.

Establishing the external context is important to ensure that stakeholders and their objectives are considered when developing risk management criteria and that externally-generated threats and opportunities are properly taken into account.

Of equal importance, the internal environment can also be considered. Understanding the organisation itself is a critical component of any risk management strategy. Key areas include:

• culture
• internal stakeholders
• structure
• capabilities in terms of resources such as people, systems, processes and capital
• business goals and objectives and the strategies that are in place to achieve them.