When you avoid a risk, you discontinue or exit the activity that gives rise to the risk. Some examples of avoidance are:
- Deciding not to purchase the new system upgrade to avoid the risk of the new system not integrating properly
- Choosing not to have a petty cash fund to avoid the risk of the money being misallocated
- Choosing not to check your bag on the airline so you don't have to risk losing your luggage
Caution should be taken, however, when avoiding risks. By avoiding risks, you can also miss the potential opportunities to improve services that accepting or controlling the risks may have allowed.
Transferring Risk
Transferring risk lets you reduce your risk exposure by transferring the risk to someone else. An example of transferring risk is purchasing insurance on state vehicles to cover the cost of any damage occurring during an accident.
Copyright 2014
New York State Governor's Office of Employee Relations