Aflac Insurance Practice Exam

Risk ____ is the process of analyzing exposures that create risk and designing programs to handle them.

Avoidance Reduction Management Transfer

Correct Answer:

Management

Explanation:

Risk management is the process of identifying exposures that create risk and designing programs to handle them. This describes the overall approach of recognizing where losses could occur, evaluating their likelihood and impact, and creating coordinated strategies to control, transfer, or prevent those losses. Within this framework, specific tactics like avoidance (eliminating the exposure), reduction (lowering the chance or severity of a loss), and transfer (shifting risk to another party, such as through insurance) are used as part of the broader program. The key idea is the structured, ongoing management of risk rather than any single tactic.

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