General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which of the following is NOT one of the five basic techniques used to manage risk?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The five basic risk management techniques are avoidance (not undertaking the risky activity), retention (accepting the risk and funding losses oneself), sharing (spreading risk across several parties), reduction (loss control that lowers frequency or severity), and transfer (shifting financial risk to another party, such as an insurer). 'Concentration' is not a management technique; in fact, concentrating exposures tends to increase risk.
Why the other options are wrong
- B) Avoidance - refusing the activity - is a recognized technique.
- C) Retention - self-assuming losses, e.g., through a deductible - is a recognized technique.
- D) Transfer - shifting risk to an insurer - is a recognized technique and the basis of insurance.
Memory hook
Avoid, retain, share, reduce, transfer - the five tools. Concentrating is not one.