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Investments glossary

Accepting Risk


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Accepting risk occurs when a business 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. It posits that 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.

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