If you could group the response strategies into sharing and

If you could group the response strategies into sharing and retention strategies, how would they be similar, how would they be different? Compare and contrast risk-sharing and risk-retention strategies. Why would an organization retain risks?

Solution

risk is the common factor to every one either people or organizations. otherwise they can not survive in the market. risk and uncertain carries an anxiety of what next and what is on tomorrow, if every one knows exactly what is happening on tomorrow, then no curiosity or anxiety carries. and they wont carry hope about future.

risk can be diversified by doing more than one activity by the firms, and by doing different business actions they diversify the risk. if one portion carries high risk, the other may carry lower, and at the end the total will be equalized.

they operates in uncertain conditions where every aspect carries risk. every action and each activity carries risk. suppose if we borrowed funds, that increases financial leverage to the firm, if not, we may not expand our business. if we focused on one product, it may cause to loss market for other products, if we produce new product if it cliks in the market it is ok, if it fails, agian future is uncertain.

there are no continuous leaders in market and regular failures, some times one may be the winner and the other time others. one of the best example is about APPLE, till recent they were enjoyed about their sales and their growth in the market. but according to recent calculations now they realized that the sales were declined.

so, every firm carries risk and it operates in risk conditions only.