Having identified and evaluated risk, the next step is to decide how to respond to the risk. Describe risk control and clearly distinguish between the three possible responses to business risks?

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Having identified and evaluated risk, the next step is to decide how to respond to the risk.
Describe risk control and clearly distinguish between the three possible responses to business risks?

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Step 1

Risk management refers to the process of controlling and managing the risk through its assessment, evaluation, and measurement and then implying the techniques that will make the risk go away.

Step 2

Risk control refers to the process of applying the techniques to eliminate the risk evaluated. This refers to the process of implementing the various measures that will eliminate or set-off the risk so that there no or minimum chances of errors.

Three possible responses to the business risks can be:

1. Avoid: This is the situation where the risk is avoided by taking another approach or taking the other way so as to not face the risk.

2. Reduce: This is the approach where the business risks are worked upon and they are minimized to a certain level such that they do not affect the business.

3. Transfer: This refers to the approach where the risk is transferred or shifted to some third participant that will bear the risk or it can be said the risk is allocated to some other element.

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