Which of the following is a common risk treatment strategy?

The common risk treatment strategy encompasses four primary approaches: risk avoidance, risk reduction, risk sharing, and risk acceptance. Each of these strategies provides a framework for organizations to manage their risks effectively.

Risk avoidance involves eliminating the risk by choosing not to undertake the activity that generates the risk. For instance, a company might decide not to launch a new product if market research indicates significant potential for failure.

Risk reduction refers to implementing measures to lower the probability of a risk occurring or the impact if it does occur. For example, a business might install safety equipment to reduce the potential for accidents in the workplace.

Risk sharing, sometimes called risk transfer, involves distributing the risk among multiple parties. This can be seen in insurance, where the financial risk of certain events is shared with an insurance company.

Risk acceptance occurs when an organization decides to take on the risk because the costs of mitigating it outweigh the potential consequences. This might be appropriate for low-probability risks that would have minimal impact.

In contrast, risk assessment documentation, creating financial reports, and employee training in risk management, while important components of an overall risk management framework, are not stand-alone risk treatment strategies. They support the identification and evaluation of risks rather than address the risks themselves directly.