Certified Management Accountant Practice Exam 2025 - Free CMA Practice Questions and Study Guide

Question: 1 / 430

Which risk management strategy involves actively stopping a behavior that leads to a risk?

Risk retention

Risk minimizing

Risk avoidance

The risk management strategy that involves actively stopping a behavior that leads to a risk is risk avoidance. This approach focuses on eliminating the potential for risk entirely by removing the source of the risk or changing the behavior that could lead to negative outcomes. For example, if a company identifies that engaging in a specific practice, like investing in a volatile market, poses a significant risk, it can choose not to engage in that investment altogether.

In contrast, risk retention involves accepting the risk while planning to deal with its consequences. Risk minimizing seeks to reduce the likelihood or impact of a risk but does not completely eliminate it. Risk transfer involves shifting the risk to a third party, such as through insurance or outsourcing. Hence, risk avoidance is specifically about stopping the behavior that creates the risk, making it the correct answer in this context.

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Risk transfer

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