How can you manage risk using risk strategies?

risk assumption

accepting the consequences of risk.

risk transfer

buying insurance to shift the risk of financial loss to an insurance company.

How can you reduce the risk of an automobile accident?

choose to drive a reliable sedan instead of a sports car. Cars are rated according to safety and injury information.

risk reduction

finding ways to lower your chance of incurring a loss.

4 risk strategies

reducing risk, avoiding risk, transferring risk, and assuming risk

self-insure

setting aside money to be used in the event of injury or loss. This is one method of assuming risk.

risk avoidance

stopping behavior that leads to a risk.

premium

the price you pay for insurance coverage. The premium can be paid monthly, quarterly, semiannually, or annually. The more risk the insurer takes, the higher the premiums.

risk assessment

the process of identifying risks and deciding how serious they are.