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What is a key component of the 'reduction' strategy?

  1. Making no changes to current risk exposure

  2. Investing in resources like safety equipment

  3. Focusing solely on financial gains

  4. Minimizing insurance policies to cut costs

The correct answer is: Investing in resources like safety equipment

The reduction strategy in risk management centers around mitigating potential losses by enhancing safety and preventative measures. Investing in resources like safety equipment is crucial because it directly addresses the risk factors that could lead to incidents or losses. By improving safety protocols and acquiring necessary tools, an organization actively reduces the likelihood of accidents or damages occurring, thereby lowering the overall risk exposure. This proactive approach fosters a safer environment and can potentially translate into lower insurance premiums, reflecting the decreased risk to insurers. The focus here is on minimizing risk through tangible improvements rather than merely adjusting financial aspects or ignoring existing exposures.