VENUS MONICA C.

CALUNGSOD In a Nutshell 3D
CEE 108 (6802)

What are five (5) methods of dealing with risk?

As people begin to age, they usually encounter more risks. The act of discovering,
analyzing, and subjugating risks is known as pure risk management, and it is a defensive
technique for anticipating the unexpected. Risk management's main principles—
avoidance, retention, sharing, transferring, and loss prevention and reduction—may be
applied to all aspects of a person's life and can pay off in the long term.

Avoidance means not participating in activities that could harm you; in the case
of health, smoking is a good example. Retention acknowledges the inevitability of certain
risks, and in terms of health care, it could mean picking a less expensive health insurance
plan that has a higher deductible rate. Sharing risk can be applied to how employer-
based benefits are often more affordable than if an individual gets their own health
insurance. Transferring risk relates to healthcare in that the cost of the care is transferred
to the insurer from the individual, beyond the cost of premiums and a deductible. Loss
prevention and reduction are used to minimize risk, not eliminate it—the same concept
is used in healthcare with preventative care.

A person who wants to avoid the risk of losing a valuable asset such as a home
can simply forgo owning one. However, there are other cases where ownership is
unavoidable, such as for equipment, appliances, and materials utilized in the
manufacturing process. Other ways of risk management must be examined in this
scenario.