Risk Strategy (Definition)

The choice a company makes for dealing with a specific risk.

The main Risk Strategies are:

1. Risk Avoidance. Choosing to discontinue or not undertake an operation to avoid the risks involved. (e.g. closing or not opening a branch in a dangerous location.)
2. Risk Mitigation or Risk Reduction. Taking steps to reduce the probability or impact of a risk.
3. Risk Transfer. Shifting the risk to another organization by taking out insurance, or sub-contracting an activity to another organziation.
4. Risk Acceptance. Recognizing the risk but choosing not to take any specific action to control or reduce it. Self-insurance, where a company chooses to pay for losses itself rather than take out insurance, is a form of risk acceptance.