Question 5 What strategies have companies put in place to deal with 'risk management'? Assess the aims of risk management. [25 marks]

Companies can undertake multiple risk management strategies as follows

1. Avoidance - It completly eliminates the risk by avoiding the risky business/ element at all

2. Transfer - The risk is shifted to a third party, like an insurance company or a vendor.

3. Mitigate- Reduces the probability of that risk and within acceptable limits, like a hedging strategy for commodities.

Aim of risk management

The purpose of risk management is to identify potetntial problems before they occur or to handle those risks once they have occrured.