Chapter 8: Risk Management

Risk

• uncertainty about possible damage, injury, or loss

• anything that threatens the ability of a person and the organization to accomplish their objectives

Eliminate Risks, Minimize Risks, Shift Risks, and Absorb Risks

Four Objectives of Good Risk Management:

Good Planning and Good Management

• probably the best protection against most risks

• protects against risks such as price fluctuations and market changes

Purchase Outside Insurance

• allows for less risks for the business and shifts them to the insurance company

• covers business risks, life fire, theft, floods, typhoons, and etc.

Risk Avoidance

• act of completely avoiding the risk

Loss Prevention Control

• to prevent or control losses from unavoidable or unavoided risky activities

Accept the risk

• absorb risk for reasons that there are cases in which the other methods are not worth the costs