Risk management is the systematic process of identifying, assessing, and addressing risks that could affect organizational objectives. For municipalities, risks include financial risks (revenue shortfalls, unexpected costs), operational risks (service disruptions, infrastructure failures), legal risks (liability, litigation), strategic risks (economic shifts, population changes), and reputational risks. Risk management involves identifying potential risks, assessing likelihood and impact, implementing controls and mitigation measures, and monitoring outcomes. Good risk management is proactive rather than reactive. Many municipalities have formal risk management frameworks, insurance programs, and emergency preparedness plans. Internal audit functions often assess risk management effectiveness.