General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
The five general techniques for handling risk are:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The recognized risk management techniques are avoidance, which means not engaging in the risky activity; retention, which means keeping the risk; sharing, which means spreading the risk among many, as in a pool; reduction or control, which lowers the chance or severity of loss; and transfer, which shifts the financial burden, as insurance does. Together these form the toolkit used after loss exposures have been identified and analyzed.
Why the other options are wrong
- B) Application, underwriting, rating, claims, and renewal describe the insurance process, not risk management techniques.
- C) Speculation and gambling are not risk management techniques; pooling is a form of sharing, and donation is not a recognized method.
- D) Purchase, replacement, cancellation, reinstatement, and lapse describe policy life-cycle events, not risk handling methods.
Memory hook
Avoid it, keep it, share it, shrink it, or shift it.