Risk Management is an important part of any business operation. To maintain financial health a business must identify and assess the best option for controlling potential losses. The methods used to control losses include:
Risk Transfer
Risk transfer involves transferring the weight or the consequence of a risk on to some other party. There are many ways that risk transfer can take place. Insurance is a commonly used method of risk transfer; the insurance company accepts the risk of another. Another form of risk transfer can happen in the way that a contract is laid. You lease is a good example because they usually have an indemnification agreement where the tenant assumes any negligence they may be respo
Risk Avoidance
Risk avoidance is exactly as it sounds. It generally involves not doing an activity in order to avoid the risk involved. The downfall of using avoidance as your main form of risk management is that by avoiding all risk, you will avoid all opportunities to earn or accomplish as well.
Risk Acceptance
Risk acceptance is also known by the name of risk retention. Risk acceptance is simply accepting the identified risk without taking any measures to prevent loss or the probability of the risk happening. This approach is ideal for those risks that will not create a high amount of loss if they occur. These risks in fact would be considered more costly to manage than to allow.
Risk Reduction or Loss Control
Risk reduction involves measures that are thrown at a risk in order to reduce the potential loss associated with that risk. A very easy to understand example of this is the installation of sprinklers in a building. Sprinklers cannot prevent a fire but are aimed at reducing the loss caused by the fire should one break out. 
One of the companies we represt – Travelers Insurance – has a nice Workers Compensation Risk Control guide for restaurants. CLICK HERE TO DOWNLOAD A COPY. You can also visit their webiste at www.travelers.com/riskcontrol
