Besides diversification, what other ways are there to reduce risk?

The two main ways to reduce investment risk are diversification and hedging. Diversification reduces the impact of particular risks by spreading investments across multiple assets, while hedging offsets a particular risk (e.g., exchange rate fluctuations) using means such as transactions that move in the opposite direction.

Just as keeping many baskets can increase costs, both diversification and hedging come at a cost, and neither eliminates all risk.