1. Controlling risk by avoiding a loss situation is known as “Risk avoidance”. Thus one may try to avoid any activity which may expose him to a loss.

    Example

    • One may simply avoid a risk by not stepping outside the house for the fear of meeting with an accident or may not travel at all for the fear of falling ill while abroad or refuse to bear certain manufacturing risks by contracting out the manufacturing to someone else.
    • But risk avoidance is a negative way to handle risk. Individual and social advancements cannot come unless people perform activities that require for some risks to be taken. By avoiding such activities, individuals and society would lose the benefits that such risk taking activities can provide.


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