Question

When you purchase insurance, you’re minimizing your risk by passing the risk to the insurance company. It’s no longer your risk alone because, in the event of an accident or other negative event, the insurance company will be responsible for covering most of the cost.

What do you call this method of dealing with risk?
Question 2 options:

Risk transfer


Risk retention


Risk reduction


Risk avoidance

Answer 1

Risk transfer

When you buy insurance you shift (transfer) the financial consequences of a loss to the insurer.