For most business owners, the term “risk management” refers to property and casualty insurance. Yet while an adequate level of insurance is part of a good risk-management plan, many other aspects of a business involve anticipating and evaluating potential risk. For instance, decisions about computer system purchases, employee hires, and even advertising strategy all involve various levels of risk management.

A good risk-management system for your business comprises a three-step process. First, recognize the risks you face. Second, devise a plan to mitigate these risks. And third, execute this plan.

The recent horrific catastrophes caused by ...