Which risk management strategy involves accepting potential negative outcomes?

The strategy that involves accepting potential negative outcomes is risk acceptance. This approach occurs when an organization recognizes the risks associated with a specific decision or action but chooses to accept the possibility of those risks rather than attempting to eliminate, transfer, or mitigate them.

Risk acceptance is a deliberate choice made after weighing the potential impacts and costs associated with that risk. It is often utilized when the cost of mitigating a risk is higher than the potential loss or harm the organization might face if that risk were to materialize. This acceptance can be applicable in scenarios where the risk is deemed manageable or unlikely to occur.

In contrast, risk avoidance involves changing plans to sidestep potential risks entirely, risk assessment encompasses the identification and evaluation of risks, and risk transfer entails shifting the risk to another party, such as through insurance or outsourcing. Each of these other strategies aims to alter the impact or likelihood of risks rather than simply accepting them as they are.