Accepting risk, also known as risk retention, is a deliberate strategy that acknowledges the possibility of minor or occasional dangers while taking no actions to hedge, insure, or minimize those risks.



Accepting risk, also known as risk acceptance, happens when a company or individual recognizes that the possible damage from a risk is insufficient to justify investing money to avoid it. Risk retention, often known as "risk retention," is a type of risk management that is commonly encountered in the business or financial fields.



Risk acceptance holds that occasional and minor risks—those that do not have the potential to be catastrophic or otherwise prohibitively expensive—are worth accepting with the understanding that any difficulties will be dealt with when they emerge. Such a trade-off is a useful tool in the prioritization and budgeting processes.



Risk acceptance is justified by the fact that the expenses of mitigating or avoiding risks are too high to justify given the low likelihood of a hazard or the little projected impact it may have.



Risk acceptance takes the form of self-insurance. In contrast, insurance transfers risk to a third party.



Many firms utilize risk management approaches to identify, assess, and prioritize risks in order to minimize, monitor, and control them. Most firms and risk management people will discover that they have more risks than they can manage, mitigate, or prevent given the resources at their disposal.



As a result, organizations must strike a balance between the potential costs of a problem caused by a known risk and the cost of preventing or otherwise dealing with it. Uncertainty in financial markets, project failures, legal responsibilities, credit risk, accidents, natural causes and disasters, and too aggressive rivalry are all examples of hazards.