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Which is not a strategy for reducing risk?

a. hedging gathering
b. information
c. specialization risk
d. spreading

1 Answer

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Final answer:

Specialization risk is not a strategy for reducing risk. Strategies like hedging, gathering information, and spreading are implemented to manage and reduce risk in business and finance.

Step-by-step explanation:

Among the options provided, specialization risk is not typically recognized as a strategy for reducing risk in the context of business and investment. Strategies for risk management often include:

  1. Hedging: using financial instruments or market strategies to offset the risk of any adverse price movements.
  2. Gathering information: performing due diligence and research to make informed decisions.
  3. Spreading: diversifying investments across various assets to reduce exposure to any single risk.

Therefore, specialization risk is not considered a risk reduction strategy, as specialization typically involves focusing on a particular area which can actually increase risk due to a lack of diversification. To answer the student's question, which is not a strategy for reducing risk, the answer would be 'C. specialization risk'

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