There are two main activities associated with risk.  First risk analysis, what are the risks, liklihood of occurrence and impact if the risk event does occur?

Following on the heels of analysis is the practice of risk management.  Some consider risk analysis just a sub process of risk management but I view them as separate practices.

Risk Tolerance

People often talk about thier tolerance for risk.  The implication being some accept more risk than others.  For me, it is not a questions of whether the initial risk is high or low, or accepting it at all, it’s how how you mitigate it so it becomes or remains low.

Any activity I undertake, whether, skiing, motor car racing, investing in equities or just walking down the street has a risk associated with it.

If the activity has a high probability of occurence and the impact will be quite detrimental, my approach is not necessarily to avoid the activity, particularly if it is some thing I want to do.

Instead of avoidance I practice mitigation.  By planning my actions in a way to reduce the likelihood of occurence coupled with an understanding of how to reduce the impact if the risk occurs, I can engage with confidence.

Consider for example bringing a Christmas tree into your house.  There is a risk it can be a catalyst for a house fire.  By watering and careful placement and use of heat sources when decorating, you mitigate or reduce the likelihood of occurance.

By having a fire extinguisher on hand you can mitigate the impact if the risk occurs.  A home insurance fire policy helps with this too.  Using these mitigation techniques enables you to bring a dead fire hazzard into your home without fear.