Types of Risk
"I can describe types of risk & explain ways to handle risk"
Example; a planned housing development, the risk in this case is that the profits from the development will not cover the costs of the development, leaving the developer in debt.
Example; The possibility that a person's house will be destroyed due to a natural disaster.
Example; Investing in a junk bond requires you to be a lot more speculative.
Example; Buying insurance to transfer risk somewhere else or to someone else.
Example; A new business competitor locating nearby.
Example; Infidelity insurance, used to protect your business against dishonest employees.
Example; Whenever there is war in a country that is an uninsurable risk. It is too widespread.
Ways that Businesses Manage Risk
Avoid - declining to engage in particular activities due to risk.
Transfer - allow someone else to assume the risk.
Insure - purchasing insurance to cover risk.
Assume - finishing an activity and accepting full responsibility.