Final answer:
The statement that accepting risk by limiting exposure to potential financial loss is a true method of risk management. Accepting risk involves being prepared with savings, wise investments, and insurance. Historically, high-risk levels have led to significant investment portfolio losses during events such as the Great Depression and the financial crisis of 2007-2008.
Step-by-step explanation:
One method of managing risk is to accept risk by seeking to limit your exposure to a financial loss. This statement is true. Accepting risk is a conscious decision to deal with a potential financial loss without trying to prevent it or transfer it to someone else. Instead, one may seek ways to reduce its impact.
This approach often involves creating a budget, saving consistently, and investing wisely to grow a financial 'nest egg'. Moreover, people use various strategies such as purchasing insurance to protect against low-probability, high-impact events. It's all part of being an informed decision-maker and having contingency plans like Plan B, in case the risks materialize.
There are historical moments when a high level of risk has been detrimental to an investment portfolio. These include, for example, the stock market crash of 1929 leading to the Great Depression, the dot-com bubble burst around the year 2000, and the financial crisis of 2007-2008. In each case, the failure to manage risk appropriately had severe consequences for investors.