Common approaches to risk management include risk avoidance, risk reduction, risk transfer and risk assumption. Risk avoidance is characterized by the avoidance of any hazard that exposes a business or an individual to risk. An example of risk avoidance would be:

a business self$-$insuring its employees' medical coverage

an entrepreneur installing a security system at his business's facility

a business owner instituting a "Cash Only" sales policy at his business

a business offering customers trade credit