Introduction • Risk management definitions, theoretical background

There are four main risk 
management strategies, or risk 
treatment options:
•
Risk acceptance.
•
Risk transference.
•
Risk avoidance.
•
Risk reduction.

---

•
Risk transference
•
Risk transfer is a risk management and 
control strategy that involves the contractual 
shifting of a pure risk from one party to 
another. One example is the purchase of an 
insurance policy, by which a specified risk of 
loss is passed from the policyholder to the 
insurer.

---

•
Risk avoidance
•
Risk avoidance is the elimination of hazards, 
activities and exposures that can negatively 
affect an organization and its assets. Whereas 
risk management aims to control the 
damages and financial consequences of 
threatening events, risk avoidance seeks to 
avoid compromising events entirely.

---

•
Risk acceptance
•
Accepting risk, or risk acceptance, occurs 
when a business or individual acknowledges 
that the potential loss from a risk is not great 
enough to warrant spending money to avoid 
it. Also known as "risk retention," it is an 
aspect of risk management commonly found 
in the business or investment fields.

---

•
Risk reduction
•
Risk reduction deals with mitigating potential 
losses by reducing the likelihood and severity