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Acceptance Risk (Strategy) – Definition

Acceptance Risk Definition

Acceptance risk is a situation whereby a company identifies a risk and finds it acceptable, thereby takes no action to reduce or minimize the risk. It is a risk taking technique used by companies when the impacts of an identified risk is not beyond what the company can bear.

When a risk is identified and an organization sees no need to spend money and time reducing the risk because its impact are bearable, it is an acceptable risk. Acceptance risk is a risk management technique in which small risks with little impacts on the organization are identified but not curtailed.

A Little More on What is Accepting Risk

Acceptance risk is a risk management technique but it is slightly different from other techniques. The major goal of risk management is to identify and analyze risks and devise means to combat the risk. In the case of acceptance risk however, the risk is identified but no action is taken to minimize it, rather, the company accepts the impacts of the risk.

There are different types of risks and no risk comes without any impacts. Acceptance risk simply posits that the company accepts the impacts of risk, therefore, does nothing to avoid the risks. Acceptance risk is not applicable for all categories of risks, it is mainly used for small risks with little impacts.

A risk can be accepted, transferred, avoided, minimized and retained. Aside from using acceptance risk as a form of risk management, there are other approaches. Below are other strategies that can be used for risk management;

  • Risk Transfer: this is also known as risk sharing. This technique is used when several parties are involved in a project, they can transfer of shares the risks among themselves.
  • Risk Avoidance: This is a strategy of eliminating all risks that can have impacts on a business or project.
  • Risk Mitigation: This entails minimizing or reducing the impacts of risk.
  • Risk Exploitation: This is a strategy used when a risk signals a positive effect. For instance, a popular product  but with less staff can exploit a risk by bringing additional staff.

Reference for “Accepting Risk”






Academics research on “Accepting Risk”

“Faster, better, and cheaper” at NASA: Lessons learned in managing and accepting risk, Paxton, L. J. (2007). “Faster, better, and cheaper” at NASA: Lessons learned in managing and accepting risk. Acta Astronautica, 61(10), 954-963. Is it possible for missions geared towards the observation of the Earth to be carried out better, faster and cheaper? This paper explores issues emanating from doing it faster, better and less expensive at NASA. Some failures were recorded by the FBC mantra coupled with a surge in the frequency of missions. Mission cadence or frequency drives innovation, training, and testing of next-gen leaders in management, engineering, and science. To maintain and create skills in designing missions, management, and execution, high mission cadence are non-negotiable. Time must be short enough to train leaders for exploration-based organizations.

Accepting Risk-Daring Greatness, Platt, L. (2004). Vital Speeches of the Day, 70(14), 445. Globalization and entrepreneurship are two sides of a coin. In today’s world, a global mindset is an indispensable asset for every entrepreneur. Lewis Platt asserted that every entrepreneur must seek out opportunities wherever possible and must look beyond the boundaries of existing business relationships.

Accepting Risk: Responsibility Versus Liability, James, A. N., & Papermaster, G. E. (1990). In Bioprocessing Safety: Worker and Community Safety and Health Considerations. ASTM International. The Biotechnology industry is experiencing significant growth; recent innovations in technology have aided the development of new products at the speed of light. Notwithstanding, producers of biotechnology products use a lot of local laboratory methods, new mechanisms are being created that are better and more appropriate to the recent innovations. Consequently, the potential risks and liabilities remain the same; bioprocessing has its customized dangers and liabilities. This paper provides a discussion on who bears the risk and shares ways of mitigating the risks relating to bioprocessing technology.

[CITATION] Shared savings don’t go far enough in accepting risk., Jacobson, C., & Evans, M. (2015). Modern healthcare, 45(46), 34. Shared savings are inconsequential in risk acceptance.

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