Some businesses avoid risks by doing which of the following?

• A. Ignoring market research
• B. Raising prices regardless of demand
• C. Diversifying their investments
• D. Specializing in a single product

Answer: (C)

Verified step by step guidance

1. Understand the concept of risk in business: Risk refers to the uncertainty regarding potential losses or gains in business activities.
2. Recognize that businesses manage risk by adopting strategies that reduce their exposure to potential losses.
3. Evaluate each option: Ignoring market research increases risk, raising prices regardless of demand can lead to losses, specializing in a single product concentrates risk.
4. Identify that diversifying investments means spreading resources across different products or markets to reduce overall risk.
5. Conclude that diversifying investments is a common risk management strategy because it lowers the impact of any single loss on the overall business.