About the Aon Risk Reward Challenge In its fifth season, the Aon Risk Reward Challenge is a unique season-long competition across the PGA TOUR and the LPGA Tour that highlights golf's best strategic decision makers. The Challenge tabulates the two best scores from every participating event a player competes in.

Consider the following example: an investment with a risk-reward ratio of 1:7 suggests that an investor is willing to risk $1, for the prospect of earning $7. Alternatively, a risk/reward ratio of 1:3 signals that an investor should expect to invest $1, for the prospect of earning $3 on their investment.

The risk-reward ratio is calculated by dividing an investment or trade's potential profit or reward by the potential loss or risk. For example, if the potential gain is $1,000 and the possible loss is $500, the risk-reward ratio would be 2:1 ($1,000/$500).

Market strategists frequently find that the ideal risk/reward ratio for their investments is around 1:3, or 3 units of expected return for each unit of additional risk. Investors can more directly manage risk and reward by using stop-loss orders and derivatives such as put options.

Examples of Risk-Taking Behavior Criminal activity such as stealing, vandalism, or trespassing. Driving under the influence of drugs or alcohol. Engaging in dangerous driving, such as street racing or texting while driving.

Market strategists frequently find that the ideal risk/reward ratio for their investments is around 1:3, or 3 units of expected return for each unit of additional risk. Investors can more directly manage risk and reward by using stop-loss orders and derivatives such as put options.

Risk and Reward: Three Ways Risk Management Adds Value

• Bringing Focus to Strategic Objectives. With strong risk management processes in place, organizations can tackle the right risks when they matter most.
• Preventing Surprises and Promoting Resilience.
• Preparing for the Future.

Consider the following example: an investment with a risk-reward ratio of 1:7 suggests that an investor is willing to risk $1, for the prospect of earning $7. Alternatively, a risk/reward ratio of 1:3 signals that an investor should expect to invest $1, for the prospect of earning $3 on their investment.

There are five basic techniques of risk management:

• Avoidance.
• Retention.
• Spreading.
• Loss Prevention and Reduction.
• Transfer (through Insurance and Contracts)

Collaboration, Context, and Communication In essence, the 3 C's - Collaboration, Context, and Communication - are fundamental to the success of an Integrated Risk Management approach.

Table of Contents

• Security and fraud risk.
• Compliance risk.
• Operational risk.
• Financial or economic risk.
• Reputational risk.

A higher risk-reward ratio is generally preferable because it offers the potential for a greater return on investment without undue risk-taking. A ratio that is too high indicates that an investment could be overly risky. However, a ratio that is too low should be met with suspicion.