Attention: Money 101 will no longer be available after May 31, 2021. After that time the Enrich financial literacy tool will be available at moving forward.

My Colorado Journey

My Colorado Journey My Colorado Journey logo
Sign In | Create an Account | Talk to Us | Need Help? | About CIC

Money Management - Head Matters


4.    Protect Against Financial Loss

b.    Examples of various ways to manage financial risks

Risk is uncertainty about whether a financial loss will occur and, if it does occur, and how much it will cost. There are four ways to manage financial risks: avoid them, reduce them, accept them, or transfer them to someone else.

Adobe Flash Player Required

Get Adobe Flash player

Hopefully, you recognized that buying insurance is a means of “risk reduction” and “risk transfer.” You are transferring the cost of a loss to others, but you still maintain some responsibility but your risk is reduced.

If you stop skydiving, you are avoiding risk by eliminating the possibility of being hurt by skydiving.

When you plan to cover costs for a car that wouldn’t bring much from the insurance company even if it were wrecked, you are insuring yourself and accepting the risk. Note that we didn’t even suggest the possibility of dropping your auto liability insurance. That action would be illegal (not to mention foolish).

Installing smoke detectors is a way to reduce risk. Such warning devices should help you save your family and help the firefighters save the house.

profile photo


My Profile
My Dashboard

Current Course:


Sign In to track your progress.

my toolbox

my toolbox


      Please sign in

      In order to save a page/activity in either your toolbox or favorites you must first be logged in.