FC&S D&O is designed to help readers gain understanding and insight into D&O insurance policies. No discussion of D&O insurance would be complete, however, without first placing it in perspective with the overall management of risk. The term risk management has been variously defined as:

• An approach of management concerned with the preservation of the assets and earning power of a business against risks of accidental loss, as stated by J. M. Rosenberg, Ph.D. in Dictionary of Business and Management, published by John Wiley & Sons, 1988.
• A process that includes the four functions of planning, organizing, leading and controlling the activities of the organization in order to minimize the adverse effects of accidental losses on that organization at reasonable cost, according to G. L. Head and Stephen Horn, Essentials of Risk Management, Volume 1, from the Insurance Institute of America, 1991.

 Because the risks of loss to directors and officers is so varied, it is often difficult for the board of directors, one department or one person to know about all the exposures that directors and officers face.

For example, although a corporation's directors and officers are primarily responsible for the affairs of the organization, it is others within the organization that manage the day-to-day administration of the organization's policies and procedures. This requires the various functional departments of the organization, individual managers and supervisors as well as legal counsel to be cognizant of a complex variety and frequently changing body of laws.