A telecommunications organization is planning to cease operations in one or the markets in which it operates due to increasing volatility and uncertainties. Which of the following risk management…

Question

Options

• ARisk acceptance.
• BRisk avoidance.
• CRisk sharing.
• DRisk reduction.

• A
  10% (4)
• B
  85% (33)
• C
  3% (1)
• D
  3% (1)

Explanation

Ceasing operations in a market is the textbook definition of risk avoidance (B) - the organization eliminates the risk entirely by withdrawing from the activity that creates it, rather than trying to manage or absorb it. Risk acceptance (A) is wrong because that means knowingly tolerating the risk and continuing operations without action. Risk sharing (C) is wrong because that involves transferring or distributing risk to another party (e.g., insurance, joint ventures) while still remaining in the market. Risk reduction (D) is wrong because that means taking steps to lower the likelihood or impact of the risk while still operating in that market.

Memory tip: Think of avoidance as "if you don't play, you can't lose" - the organization opts out of the game entirely. Any response that keeps the organization in the market (accepting, sharing, or reducing) cannot be avoidance.

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