Definition of Accepting risk:
Risk management technique appropriate where the cost of managing the risk is acceptable because the risk level is insufficient to justify the cost of risk avoidance.
Accepting risk, or risk acceptance, occurs when a business or individual acknowledges that the potential loss from a risk is not great enough to warrant spending money to avoid it. Also known as "risk retention," it is an aspect of risk management commonly found in the business or investment fields.
Risk acceptance posits that infrequent and small risks — ones that that do not have the ability to be catastrophic or otherwise too expensive — are worth accepting with the acknowledgement that any problems will be dealt with if and when they arise. Such a trade-off is a valuable tool in the process of prioritization and budgeting.
How to use Accepting risk in a sentence?
- Accepting risk, or risk retention, is a conscious strategy of acknowledging the possibility for small or infrequent risks without taking steps to hedge, insure, or avoid those risks.
- The rationale behind risk acceptance is that the costs to mitigate or avoid risks are too great to justify given the small probabilities of a hazard, or the small estimated impact it may have.
- Self-insurance is a form of risk acceptance. Insurance, on the other hand, transfers risk to a third-party.
Meaning of Accepting risk & Accepting risk Definition