Every business venture is something of a gamble, because the possibility of loss is as real as the prospects for profits. And even though managers do everything possible to ensure that their business succeed, they cannot guard against every conceivable form of risk. Events representing the kind of risk that no business can predict or escape, known as Pure Risk, it is the threat of a loss without the possibility of gain. In other words, a disaster such as avalanche or fire is costly for the business it strikes, but the fact that no disaster occurs contributes nothing to a firm's profit. Every business accepts the possibility of losing money in order to make money.
Risk Management is the process of reducing the threat of loss due to uncontrollable events.
To consider the probability that an event will occur. To avoid the possibility of a suit , for example, not to produce any products -which would ,of course, eliminate both the threat of a lawsuit and the opportunity to profit. With rare exceptions, avoiding risk entirely is extreamly difficult. Risk reduction is an important element in most companies' approach to risk management. Typical precautions include putting safety locks on doors to prevent robberies, installing overhead sprinklers to minimize fire damage, and periodic checking motor vehicles to prevent accidents.