Certified Management Accountant Practice Exam 2025 - Free CMA Practice Questions and Study Guide

The term that encapsulates the intentional acceptance of higher risk to achieve superior returns is risk exploitation. This concept recognizes that in the business world, taking calculated risks can often lead to significant rewards. Investors or businesses may choose to pursue riskier ventures, understanding that while there is a possibility of loss, there is also the potential for higher returns that are generally associated with risk-taking.

In contrast to risk avoidance, which involves strategies aimed at completely eliminating risks, or risk reduction, which focuses on minimizing the impact or likelihood of risks, risk exploitation embraces the idea that some level of risk is necessary for growth and profitability. Additionally, risk sharing entails distributing the risk across different parties, which mitigates exposure but does not actively seek higher returns by courting risk.

Thus, risk exploitation stands out as the approach where risk is not only accepted but strategically pursued in the hope of achieving greater financial performance.