Question

Thoroughly describe FOUR (4) approaches in managing risks

*please do not copy other answers*

Answer 1

Lets break the question in two parts for better understanding .First we should understand what is risk and second we will come to ways of managing it.

Risk in simple terms can be said as harm or loss.But in business term risk means exposure of a company toward factor which will lead to loss or expose the organization towards loss.Anything that threatens company's ability to meet it's target.

Basic method to avoid risk are:

1)Avoidance:

Here avoidance means not participating in activity that could lead you towards risk.Not participating in any activity that may eventually expose you to the risk.For example people know smoking kills still they smoke but if they avoid smoking it can save them from various problems and even death.

2)retention

Here retention means acceptance .Now this acceptance is in the form of calculated risk. Now this calculated risk is the maximum exposure one can bear before incurring any loss or risk.For example health risk.People know that they will fall ill hence they are pre prepared via risk insurance and all.

3)Sharing

Sharing reduces risk.In personal life also if we share our problems we feel less burden and a quick solution is possible.

4)Transferring

Transferring does not eliminate the risk factor but it definitely give the strength to fight against it.For example health insurance or any kind of insurance is like transferring of risk.