Which term means avoiding risk by not engaging in certain activities?

• A. Risk acceptance
• B. Risk avoidance
• C. Safeguard
• D. Risk sharing

Answer: (B)

Risk avoidance means eliminating exposure by choosing not to engage in the activity at all. This approach directly prevents the possibility of loss by removing the risk from the equation, typically chosen when the risk is unacceptable or not cost-effective to manage. For example, a company might refrain from a high-risk project entirely rather than try to mitigate it. This differs from risk acceptance, where the organization knowingly tolerates the risk; from safeguards, which aim to reduce the risk while still allowing the activity; and from risk sharing, which transfers the risk to another party.