Tutorial 7:

Topic 4.1 Risk Avoidance

1. What is Risk Avoidance? Give an example.
Ans: Avoiding carrying out or not performing an activity that carry risk. E.g., if undertaking a
capital expansion project may expose the organization to losses that they would not be able to
recover from, then the project may be scrapped.
2. What is a dilemma with risk avoidance? Give an example.
Ans: being critical to avoid all or most risks can cause entrepreneurs to miss out on some
opportunities. For instance, not starting a business or deciding not to expand due to fear of
personal financial loss also avoids the potential of earning a profit.
3. When do you apply risk avoidance as a strategy in your small business?
Ans: during the process of evaluation and analysis of alternative options and solutions.
4. What are four (4) of the risk avoidance strategies we looked at? Give
an example for each.
Ans: - do not it- if the risks are activity-based and in quadrant 1.
- let someone else do it for you: if the risks are activity-based but non-core activities in
your business and Q1
- create a work culture of risk avoidance & accountability.
- ensure the consistency of internal and external communications of the company on a
given subject.
5. Overall what is an important strategy for ensuring that risks are identified and dealt
with in a consistent and strategic manner?
Ans: risk avoidance.
6. How do you create a “work culture of risk avoidance”?
Ans: train and educate the employees, in a classroom atmosphere, how the words of people in
other industries have been used against their companies in the courtroom. Engage all employees
in a continual process of risk assessment and avoidance.