Risk management is about managing threats to your business. In the broadest sense, risk management includes threats created by everything from politics to the environment to a particular real estate transaction. Managing risk is, therefore, always about prioritization. What is needed is a plan to deal with the risks that create the potential loses most likely to occur in your business.
Your business is helping buyers and sellers involved in real estate transactions. To manage the risk generated by that activity you must look at the business activities that create the potential for economic loss. These will include the “generic” risks that attach to operating any business as well as the “transaction” risk that attach to individual real estate transactions. That means dealing with the risk involved in driving customers and clients around in your car as well as the risk that a client will experience a financial loss as the result of a transaction. Beginning with Risk Identification, this topic covers both the generic and transaction risks associated with providing professional real estate services.
Once the generic and transaction risks associated with providing professional real estate services have been identified, specific risks will be analyzed in the Risk Analysis section of this topic. Risk analysis involves identifying the events and activities most associated with specific legal claims like misrepresentation, lack of due diligence or law or rule violations. The final section of this topic is devoted to Risk Mitigation, or how to use human, organizational and technological resources to reduce risk.