Which is not a component of the risk management process?

Which is not a component of the risk management process?

• A. Risk transfer
• B. Risk sharing
• C. Risk avoidance
• D. Risk expansion

Answer: (D)

The risk management process centers on reducing or controlling potential losses. It starts with identifying and analyzing risks, then choosing ways to handle them. Common strategies include avoiding the risk, reducing either the chance of the loss or its impact, transferring the risk to another party (such as through insurance), or retaining the risk when that approach is acceptable. Expanding risk, meaning increasing exposure to loss, isn’t a technique used to manage risk. It would defeat the purpose of risk management, which is to lessen potential harm. That’s why expanding risk is not a component of the risk management process.

The risk management process centers on reducing or controlling potential losses. It starts with identifying and analyzing risks, then choosing ways to handle them. Common strategies include avoiding the risk, reducing either the chance of the loss or its impact, transferring the risk to another party (such as through insurance), or retaining the risk when that approach is acceptable. Expanding risk, meaning increasing exposure to loss, isn’t a technique used to manage risk. It would defeat the purpose of risk management, which is to lessen potential harm. That’s why expanding risk is not a component of the risk management process.