List 4 methods of managing risk and give an example of each. Method of responding to...

List 4 methods of managing risk and give an example of each.

Method of responding to risk	Example
Reduce risk

Solutions

Expert Solution

In every business, there is some kind of risks assciated with. No business activities comes with risk free avenues.

The four methods of managing risk are;

1. Sharing of the risk - It is one of the fundamental way of managing it as the risk is shared with the others such as employee, the total is reduced. For example, offering compenation linked with performance.

2. Transferring - In this action, the risks are transfered from one entity to another. For example, in insurance the risk is transferred to the insurer.

3. Avoidance - It is associated with not participating in the risky activities. For example, oil exploration activity is highly risky one.

4. Reduction - It is the risk management where risks are minimized by taking certain steps. For example. a loss making company can be better off by selling its loss making ventures from its portfolio.

jeff jeffy answered 2 years ago

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