Risk management examples
One example of risk management could be a business identifying the various
risks associated with opening a new location. They can mitigate risks by choosing
locations with a lot of foot traffic and low competition from similar businesses in
the area.
Another example could be an outdoor amusement park that acknowledges
their business is completely weather-dependent. In order to alleviate the risk of a
large financial hit whenever there is a bad season, the park might choose to
consistently spend low and build up cash reserves.
Yet another example could be an investor buying stock in an exciting new
company with high valuation even though they know the stock could significantly
drop. In this situation, risk acceptance is displayed as the investor buys despite the
threat, feeling the potential of the large reward outweighs the risk.
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