Which term means eliminating an activity or exposure to remove the chance of a loss?

Which term means eliminating an activity or exposure to remove the chance of a loss?

• A. Exposure
• B. Frequency
• C. Avoidance
• D. Loss

Answer: (C)

Avoidance means eliminating an activity or exposure to remove the chance of a loss. In risk management, avoidance stops the risk entirely by not engaging in the activity or removing the situation that creates it, so the loss cannot occur because the exposure no longer exists. This is the simplest and most direct way to prevent a loss, though it may not always be practical if the activity has value or benefits. By contrast, exposure is simply being exposed to risk, frequency refers to how often a loss could occur, and loss is the actual adverse outcome that could happen if the risk materializes.

Avoidance means eliminating an activity or exposure to remove the chance of a loss. In risk management, avoidance stops the risk entirely by not engaging in the activity or removing the situation that creates it, so the loss cannot occur because the exposure no longer exists. This is the simplest and most direct way to prevent a loss, though it may not always be practical if the activity has value or benefits. By contrast, exposure is simply being exposed to risk, frequency refers to how often a loss could occur, and loss is the actual adverse outcome that could happen if the risk materializes.