Which of the following is an example of risk reduction?-Installing a fire hose system on every floor of a building-Carrying an adequate amount of insurance to cover any loss.-Refusal to work in a building that is not made of brick or concrete-Not purchasing insurance because of a past history of zero claims
Installing a fire hose system on every floor of a building
Carrying an adequate amount of insurance to cover any loss is an example of risk reduction.
Risk reduction is the process of taking actions or implementing strategies to minimize the negative impact of potential risks. In this context, insurance provides a mechanism to minimize financial losses due to unforeseen events. By purchasing insurance, individuals or businesses transfer their risk to an insurance company, which assumes the responsibility of covering damages or losses that occur within the policy’s limit.
Installing a fire hose system on every floor of a building and refusing to work in a building that is not made of brick or concrete are examples of risk avoidance, which involves taking actions to eliminate the possibility of risks. Not purchasing insurance because of a past history of zero claims is an example of risk retention, which entails accepting the consequences of a potential loss without transferring the risk.
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