Which of the following methods of addressing risk is most associated with insurance? Response:

Risk transference involves shifting the burden of risk to another entity, and purchasing insurance is a prime example of this strategy. By paying premiums, an organization transfers the financial consequences of certain potential losses to the insurance company.

Risk avoidance means eliminating the risk entirely by ceasing the activity that gives rise to the risk.

Risk acceptance involves acknowledging a risk and deciding to take no action to reduce or eliminate it, typically because the cost of mitigation outweighs the potential impact.

Risk mitigation involves taking steps to reduce the likelihood or impact of a risk event.