Companies can usually respond to risks in three ways: avoidance, mitigation, or acceptance.
When a company chooses the avoidance way, it tries to eliminate a particular risk by identifying and eradicating its cause.
The mitigation allows a business to diminish the projected financial value associated with risk by decreasing the possibility of its occurrence.
And the acceptance way means acceptance of the risk. It’s possible when a business develops contingencies to alleviate the impact of the risk or mitigating the risk may cost more than the amount of the potential risk.