2 The pharmaceutical industry involves inherent risks. The drugs developed by corporations in the industry may not be as effective as research indicated and over time may produce unexpected, unintended, and serious side effects. How can pharmaceutical corporations use risk avoidance, risk reduction, risk transference, and risk retention in managing these risks? 1. Risk avoidance is an appropriate strategy when the potential losses seriously outweigh the likely benefits. What factors should be considered on the cost and benefit sides of the analysis? At what point should a business decide to discontinue an activity rather than try to manage the risk involved? What is one clear example of risk avoidance