There are always some things that cannot be controlled, and risks always exist. As managers, they will take various measures to reduce the possibility of risk events, or control the possible losses within a certain range to avoid unbearable losses when risk events occur.
The four basic methods of risk control are: risk avoidance, loss control, risk transfer and risk retention.
Extended data:
Risk aversion means that investors consciously give up risk behavior and completely avoid specific loss risks. Simple risk aversion is one of the most negative risk management methods, because investors often give up potential target income while giving up risk behavior. Therefore, this method is generally only used in the following situations:
1. Investors are extremely risk-averse.
2. There are other schemes that can achieve the same goal with lower risk.
3. Investors cannot eliminate or transfer risks.
4. Investors are unable to take risks, or the risks are not adequately compensated.
Baidu Encyclopedia-Risk Control