The four risk management methods are:
- Avoidance – Refraining from any activities that carry unacceptable risks
- Reduction– Taking the necessary steps to minimize the severity of the risk or the likelihood of it occurring
- Transfer – Transferring the risk to another party due to its financial impact. In this case, risks are usually transferred
through contracts or insurance.
- Acceptance – Making a conscious, informed decision to accept the risk. This approach is viable for small risks where the cost of mitigation or transfer would be greater over time than the total losses sustained.