Risk management in finance refers to the process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions. Essentially, it is the practice of using strategies to manage and reduce financial risks and potential financial losses. Techniques include diversifying investments, using financial instruments such as options and futures, and setting stop-loss orders. Effective risk management helps ensure optimal risk-return balance and is crucial for a company’s financial well-being and reputation.
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About the author
Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
Her insights simplify complex financial topics into actionable strategies for beginners and seasoned traders alike.