risk management

Being able to look at the risk and evaluate them. Four options regarding risk are:

1.) Risk avoidance - Eliminate the risk if it does not interfere with the goals of an endeavor. For example: it would be fun to have a dog at a day care center, however, the dog may pose a risk to the children so getting rid of the dog eliminates the risk.

2.) If it can not be eliminated, it can be controlled. For example: no way to completely avoid a building from catching on fire but you can control a fire that may start by installing a sprinkler system, providing wall mounted extinguishers, practicing safe operating methods to minimize the likelihood of a fire starting.

3.) depending on potential amount of financial harm and risk takers ability to absorb the risk, it can be transferred to another party. This is where insurance comes into play.

4.) if a risk is necessary, unlikely to occur, and cost to use another method fails to justify the expense, the risk taker can simply accept the risk.

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