What is the difference between proactive and reactive risk management?

Proactive risk management focuses on identifying potential risks before they materialize and implementing strategies to prevent or mitigate their impacts. This approach emphasizes foresight and preparedness, enabling organizations to anticipate challenges and take preventive measures to reduce vulnerabilities.

In contrast, reactive risk management comes into play only after a risk has occurred. It involves responding to incidents or crises effectively but does not focus on prevention or mitigation in advance. This method can lead to greater consequences, as actions are taken only after a situation has already impacted the organization.

Choosing the correct response highlights fundamental distinctions in how these two approaches handle risk. Proactive management is about anticipating and safeguarding against potential threats, while reactive management deals with the fallout of events that have already taken place.