Risk avoidance is a strategy to give up or change actively to avoid risks related to an activity when considering the possibility of risk loss in the activity. Therefore, eliminating risk factors before risks occur is the most thorough risk control technology. Risk avoidance is the most effective risk management method when the potential threat of project risks is great, which will bring serious consequences and the losses cannot be transferred and borne. It can be achieved by modifying the project objectives, project scope and project structure. There are two specific methods: (1) give up or terminate the implementation of an activity, that is, refuse to take risks; (2) changing the nature of an activity, that is, avoiding the risks in future production activities by changing the work place and technological process under the risk.

One is to completely avoid risks, that is, to avoid the source of risks by giving up or refusing to cooperate to stop business activities. Although potential or uncertain losses can be avoided, the opportunity to gain benefits will also be lost.

Second, the control of risk loss is to reduce the loss degree by supporting the loss probability.

Third, transfer risk, that is, transfer the potential losses that you may follow to the other party or the third party in some way.

Financial risks can usually be avoided by means of intentional avoidance, implementation of control and decentralized transfer. At all stages of financial activities, different technical methods can be adopted.

Technical methods of fund-raising risk avoidance

First of all, make full use of self-owned funds, strengthen the control of self-owned funds, strictly examine and approve all kinds of borrowed funds and recover them in time. Secondly, choose a reasonable capital structure, that is, the ratio of debt capital to self-owned capital should be appropriate, make full use of the financial leverage of debt capital, and choose the best financing portfolio with low total risk. Third, pay attention to the collocation of long-term and short-term debt capital to avoid excessive concentration of repayment period of principal and interest of debt capital. Fourth, choose a variety of financing channels. For example, issuing stocks and bonds, borrowing from banks or non-financial institutions, and making full use of commercial credit such as accounts payable, notes payable and accounts received in advance. Fifth, improve the efficiency of capital use. Whether it is self-owned funds or debt funds, only by improving the efficiency of the use of funds can we ensure the solvency and profitability of enterprises.

Folding investment

Technical methods to avoid investment risks

First of all, we should invest carefully, and only when the funds are running well or there are surplus funds will we consider foreign investment with extra remuneration. Second, if investment is a necessary part of production and operation or risky investment, we must draw up a rigorous investment plan, conduct scientific investment recovery evaluation and demonstration, choose the best investment opportunity, and avoid capital shortage or ineffective operation. Third, make a reasonable investment portfolio. Portfolio includes the combination of different investment varieties, the combination of investment projects in different industries or departments, and the combination of different durations, in order to pursue the best combination of profitability, risk and robustness. Fourth, strengthen the research on the systematic risk and non-systematic risk of securities investment, so as to reduce and offset the impact on securities investment income.