Arkansas Insurance Adjuster Practice Exam

Risk avoidance is a risk management technique that:

1. eliminates risk.

2. increases risk.

3. counterbalances risk.

4. reduces risk.

The correct answer is: eliminates risk.

Risk avoidance is a risk management technique that completely eliminates risk. This means that all potential risks are avoided and not taken on at all. Option B, increasing risk, goes against the concept of risk management since it would mean taking on more risks instead of mitigating them. Option C, counterbalancing risk, may be a strategy used to manage risk, but it does not necessarily eliminate or reduce the risk. Option D, reducing risk, is a more common risk management technique that aims to minimize or mitigate risks rather than completely eliminate them. Therefore, option A is the most accurate description of risk avoidance as a risk management technique.