Risk Management Data
Statistics & Risk Management
Risk Management Data
Statistics & Risk Management
There are four main strategies involved in Risk Management:
Avoidance
- Involves removing a hazard, engaging in an alternative activity or avoiding a specific exposure for the business. For example, you can avoid the risk of an airplane crash by simply choosing not to fly at all. Although avoidance is a sure bet, it also means you lose out on potential gains (i.e. a great vacation trip to Europe!)
Reduction - Also known as risk mitigation, risk reduction is a systematic decrease in the extent of exposure to a risk or the possibility of its occurrence. An example of this is the fire sprinklers we see installed in almost all public buildings. While this mitigates the risk of fire damage, it may cost you more in water damage! It's important to weigh the pros and cons of mitigation.
Transference - Shifting one risk to another such as purchasing insurance. This is perhaps the most utilized strategy in Risk Management. Also known as 'risk sharing', an example might be your purchase of health insurance. Most policies require that you meet a certain deductible before utilizing their benefits.
Retention - Basically the opposite of transference which means the organization accepts the total amount of the risk instead of insuring it.This may happen when the cost to insure is greater than the potential for loss.
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