Affordable loss is a risk management strategy that involves making calculated decisions with the understanding that any possible losses incurred are financially acceptable and tolerable. It is a mindset in which a person is willing to take on a certain level of risk without fear of significant financial harm. For example, an entrepreneur may invest a certain amount of money in a new venture, with the understanding that they can afford to lose that money if the venture fails. The concept of affordable loss encourages individuals to take calculated risks and make decisions based on potential outcomes, rather than simply avoiding risk altogether.
