derisking
Minimizing potential losses
Derisking is the practice of reducing exposure to potential losses or uncertainties.
Financial institutions derisk by shedding volatile assets or exiting relationships deemed too risky: The bank derisked its portfolio by selling subprime loans.
In project management, derisking means identifying and mitigating threats before they materialize.
The term often carries a defensive or precautionary tone—prioritizing safety over potential gains.
Ties that unite
- index fundsSecurities mirroring market indices
- blue chip stocksShares in financially solid corporations
- mutual fundsCollectively managed securities portfolios
- fixed incomeStable recurring revenue
capital preservation · dollar-cost averaging · defensive stocks · treasury securities · money market funds · laddering · rebalancing · safe haven assets
Noncommittal maneuvering
- diversificationExpanding into varied areas
- asset allocationDistributing investments strategically
- credit default swapContract paying if bonds fail
- stress testingEvaluating capacity under extreme conditions
Prepared alternative course
- due diligencePre-transaction reasonable care
- safeguardPrecaution against harm
- preventive measuresActions to stop problems beforehand
- backup systemsRedundant mechanisms for continuity
redundancy · business continuity · disaster recovery · pilot testing · phased rollout · failover · quality assurance · audit
Gear that prevents harm
- guardrailRoadside safety barrier
- failsafeAutomatic protective default
- redundant systemsDuplicate mechanisms preventing failure
- safety marginBuilt-in tolerance for error
buffer zone · warning systems · emergency shutoff · certification · testing standards · safety factor · backup power · fire suppression
Assessment of project practicality
- prototypingMaking preliminary models
- proof of conceptDemonstration of feasibility
- minimum viable productSimplest testable market offering
- pilot programTest phase before expansion
bonds
Ties that unite
- index fundsSecurities mirroring market indices
- blue chip stocksShares in financially solid corporations
- mutual fundsCollectively managed securities portfolios
fixed income · capital preservation · dollar-cost averaging · defensive stocks · treasury securities · money market funds · laddering · rebalancing · safe haven assets · inflation protection
hedging
Noncommittal maneuvering
- diversificationExpanding into varied areas
- asset allocationDistributing investments strategically
- credit default swapContract paying if bonds fail
contingency plan
Prepared alternative course
- due diligencePre-transaction reasonable care
- safeguardPrecaution against harm
- preventive measuresActions to stop problems beforehand
backup systems · redundancy · business continuity · disaster recovery · pilot testing · phased rollout · failover · quality assurance · audit · compliance
protective equipment
Gear that prevents harm
- guardrailRoadside safety barrier
- failsafeAutomatic protective default
- redundant systemsDuplicate mechanisms preventing failure
safety margin · buffer zone · warning systems · emergency shutoff · certification · testing standards · safety factor · backup power · fire suppression · containment
feasibility study
Assessment of project practicality
- prototypingMaking preliminary models
- proof of conceptDemonstration of feasibility
- minimum viable productSimplest testable market offering
deriskingrisk-taking
Accepting possible harm
speculation · leveraging · risk-on · doubling down · gambling
risk, risky, risks, risking, riskiness, risk-free, riskiest, riskier, riskless