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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Risk Management

Banyan Logistics Ltd has assessed a risk of fleet accidents as having high likelihood and high impact. Management decides to stop operating on a particular hazardous hill route altogether. Under standard risk response categories, this decision is best described as:

This is risk avoidance. By discontinuing the hazardous route, the company removes the activity that creates the exposure entirely. Sharing through insurance or reducing through training would keep the route running and the risk partly in place, so those do not describe the decision.

  1. ARisk acceptance
  2. BRisk avoidanceCorrect
  3. CRisk sharing through insurance
  4. DRisk reduction through training

Explanation

Exiting the activity that gives rise to the risk eliminates the exposure, which is avoidance. Insurance would transfer or share it, and training would only reduce it while the route is still operated.

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