Self-insuring is an example of which risk strategy?

Question

BlackTom AI · Accepted Answer

Question: Self-insuring is an example of which risk strategy?

Option 1: risk transfer. This would mean shifting the financial burden of a risk to another party, such as purchasing insurance or outsourcing. Self-insuring does not transfer cost to an external insurer; the organization bears the potential losses itself, so this option misidentifies the mechanism involved.

Option 2: risk reduction. Risk reduction focuses on lowering either the probability or impact of a risk through controls or preventive measures. While self-insurance might be accompanied by cost controls, the core idea of self-insuring is not primarily about reducing risk through mitigation, but about accepting and funding potential losses internally.

Option 3: risk assumption. Self-insuring is the practice of setting aside funds to cover potential losses internally, effectively assuming the risk rather than transferring or mitigating it externally. This aligns with the definition of risk assumption, where the entity bears responsibility for any losses that occur.

Option 4: risk avoidance. Risk avoidance involves changing plans or processes to eliminate the risk entirely, such as not engaging in a risky activity. Self-insuring does not eliminate the activity or risk; it prepares to cover potential losses if the risk materializes, so it is not avoidance.

In summary, the concept that best matches self-insuring is that the organization internally accepts and funds potential losses, i.e., risk assumption.

Self-insuring is an example of which risk strategy?单项选择题

类似问题

Which statement reflects the role of management actions in risk management within an aviation business?

Lauren is studying the two major components of risk management within an aviation business. Which of the following correctly describes these components?

During a risk review meeting at Atlantic Aviation, Julissa evaluated the types of normal business risks the company must prepare for. Which of the following is NOT one of the typical business risks faced by an aviation operation?

Question at position 7 Operations managers do not need to consider the risks of a technology if the benefits are high.TrueFalse

______ is the process of deciding which risks are worth addressing and the extent to which these risks should be avoided.

Preventable risks are those that can be avoided through ______.

Enterprise risk management is a(n) ______.

Internalizing a risk means that the party who creates a risk ultimately _____ for it.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单