What is the purpose of risk avoidance strategies?

• A. To eliminate or mitigate significant future risks
• B. To maximize short-term profits
• C. To transfer all risk to vendors
• D. To delay decision making

Answer: (A)

The idea being tested is how risk avoidance works in risk management: it focuses on preventing adverse events by eliminating exposure to a risk or by removing the circumstances that could cause harm. The best choice captures that goal by saying the purpose is to eliminate or mitigate significant future risks. Avoidance means not taking on activities that carry unacceptable risk or changing plans so those risks no longer exist, even if that means forgoing some opportunities.

This isn’t about chasing short-term profits, which often involves accepting more risk to gain gains. It isn’t about moving all risk to vendors, which is risk transfer rather than avoidance. And it isn’t about delaying decisions, which can keep risks alive or create new ones instead of reducing them.