How to handle risks
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Avoidance: not taking any risk.
Risk retention: active: passive:
Risk control (loss prevention and reduction)
Risk transfer (transferring risk to another entity by means of legal mechanisms or
though actions of organizational nature)
5- Distribution (risk repartition, sharing) distributing financial effects of risk realization
among a group.
6- Insurance: combining the above-mentioned methods of risk treatment: risk transfer…
Is a tool that makes possible to replace an uncertain but big loss with a small but
certain loss (insurance premium)