Question

In: Finance

Explain the each of the Risk Control methods.

Explain the each of the Risk Control methods.

Solutions

Expert Solution

There are 5 methods of risk control and risk control methods are as follows-

A. Risk avoidance-this method is used to avoid the risk that is being offered in the business so this will be taking all the measures in order to avoid the specific risk in advance.

Ex-avoiding of smoking in order to get healthy.

B. Risk retention- Risk retention is a process of retaining risk in order to acknowledge the risk and manage it so that it will be helpful in knowing the risk in advance and being aware about it.

C. Risk sharing-this type of risk control method is used to share the risk between two of the parties and this is used to manage the risks between both the parties like forward contract.

D. Transferring of risk in the method of transferring of risk to another party or another third party in order to eliminate and minimise the risk.

E .Risk Substitution- it is a type of risk control method in which risk is substituted so that it will be harming the business lesser.

these are the five types of risk control measures which are adopted in order to minimise Risk.


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