Which risk management action involves avoiding a risk altogether?

The action of avoiding a risk altogether is referred to as "avoid." This strategy is implemented when an organization determines that the potential impact of a risk is unacceptable and takes proactive measures to eliminate the risk entirely from its operations or plans. For example, a company may choose not to engage in a particular activity, such as expanding into a new market that poses significant legal risks, or it might decide to discontinue a product line that has a high likelihood of causing liability claims. By doing so, they effectively prevent any potential loss associated with that specific risk.

In contrast, other risk management actions focus on different strategies. "Reduce" involves implementing measures to minimize the severity or likelihood of a risk, "transfer" relates to shifting the risk to another party, often through insurance or contracts, and "retain" means accepting the risk with the understanding that it may materialize without implementing specific measures to eliminate or reduce it. Therefore, choosing to avoid a risk is a decisive action aimed directly at eliminating any chance of that risk impacting the organization.