Exposure to Loss

How might you lose more of your—or your corporation’s—investment than you are willing to tolerate? Explore means of reducing your vulnerability to excessive loss. For example, for personal funds, does it make sense to buy insurance, place stop-loss orders on stocks you own, diversify your portfolio, or use other investment instruments? Organizations seeking to reduce vulnerability to loss might test new ideas with prototypes or computer simulations, conduct random audits, develop worst-case scenarios, hedge overseas currencies, or form alliances. Write your plan below.

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