If the chance of loss is high and loss severity is high, generally the most appropriate risk management tool is:
A) risk transfer
B) risk reduction
C) risk assumption
D) risk avoidance

Question

Quizplus · Accepted Answer

If the chance of loss is high and the loss severity is high, the best risk management tool is to avoid the risk altogether. This means not engaging in the activity or project that poses such a high risk of loss. It may also mean avoiding certain locations, markets, or suppliers that pose significant risk. Avoidance is the best option in cases where the potential loss is too great, and where other risk management tools such as risk transfer, risk reduction, or risk assumption may not be sufficient.

If the Chance of Loss Is High and Loss Severity