Theories of Risk Management

Theories of risk management focus on identifying, assessing, and mitigating potential risks that could impact an organization or individual. Key theories include the Risk-Return Tradeoff, which balances the potential for profit against the risk of loss; the Risk Assessment Theory, which involves evaluating the likelihood and impact of risks; and the Decision Theory, which aids in making informed choices under uncertainty. These theories help in developing strategies to minimize negative outcomes while maximizing opportunities, ensuring more informed and resilient decision-making in various contexts.