Insurance Broker Certification Practice Exam

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What method of risk management is demonstrated by a person who decides never to drive again after a minor accident?

Avoidance
Reduction
Transfer
Retention

The correct answer is: Avoidance

The method of risk management demonstrated by a person who decides never to drive again after a minor accident is avoidance. This approach involves eliminating the possibility of an undesirable event occurring by avoiding the activity that could lead to that risk. In this scenario, by choosing not to drive, the individual is taking proactive steps to ensure they do not encounter the risks associated with driving, such as accidents or injuries. This decision reflects a clear intent to steer clear of the situation that caused them concern, thereby removing themselves from any potential future risk. While other risk management strategies exist, such as reduction, transfer, and retention, avoidance specifically focuses on eliminating exposure to the risk altogether, which aligns perfectly with the individual's choice in this case.