Which term is a risk control technique that reduces the severity or financial impact of losses that are not prevented?

Which term is a risk control technique that reduces the severity or financial impact of losses that are not prevented?

• A. Prevention
• B. Occurrence
• C. Peril
• D. Reduction

Answer: (D)

The concept being tested is how to lessen the impact of losses that still happen after preventive measures. Reduction is the term that fits because it focuses on lowering the severity or financial impact of losses that are not prevented. Even with safeguards, some losses will occur, and reduction aims to minimize their consequences through measures like backup systems, redundancies, and contingency planning that limit how bad the loss otherwise would be. Prevention aims to lower how often losses occur, not how bad they are when they do happen. Peril refers to the actual hazard causing the loss, and occurrence is simply the event of a loss happening, not a control technique.

The concept being tested is how to lessen the impact of losses that still happen after preventive measures. Reduction is the term that fits because it focuses on lowering the severity or financial impact of losses that are not prevented. Even with safeguards, some losses will occur, and reduction aims to minimize their consequences through measures like backup systems, redundancies, and contingency planning that limit how bad the loss otherwise would be.

Prevention aims to lower how often losses occur, not how bad they are when they do happen. Peril refers to the actual hazard causing the loss, and occurrence is simply the event of a loss happening, not a control technique.