Which term describes a risk control technique that attempts to reduce the severity or financial impact of losses that are not prevented?

Which term describes a risk control technique that attempts to reduce the severity or financial impact of losses that are not prevented?

• A. Reduction
• B. Prevention
• C. Risk Analysis
• D. Occurrence

Answer: (C)

Reducing the severity of losses when they do occur is about risk reduction. After you’ve put in measures to prevent some events, you still face residual risk—the chance that a loss happens and its impact remains. Risk reduction focuses on lowering that impact, through strategies like safety enhancements, redundancy, contingency planning, and insurance coverage, to cap financial damage and speed recovery. Prevention, in contrast, aims to lower the likelihood of the event happening in the first place, not the size of the loss if it does happen. Risk analysis is about identifying and evaluating risks, not applying controls to lessen consequences. Occurrence isn’t a control technique at all.

Reducing the severity of losses when they do occur is about risk reduction. After you’ve put in measures to prevent some events, you still face residual risk—the chance that a loss happens and its impact remains. Risk reduction focuses on lowering that impact, through strategies like safety enhancements, redundancy, contingency planning, and insurance coverage, to cap financial damage and speed recovery.

Prevention, in contrast, aims to lower the likelihood of the event happening in the first place, not the size of the loss if it does happen. Risk analysis is about identifying and evaluating risks, not applying controls to lessen consequences. Occurrence isn’t a control technique at all.