Which statement best describes reducing risk?

• A. Taking measures to help prevent accidents like buying insurance, locking your car, parking in well-lit areas.
• B. The person named to receive insurance proceeds.
• C. Ownership in a company.
• D. A plan to reinvest dividends.

Answer: (A)

Reducing risk means taking actions that lower the chance of a loss or lessen its impact. The best statement describes concrete steps you can take to protect yourself and your possessions. Buying insurance helps transfer some financial risk to an insurer, while locking your car and parking in well-lit areas deter theft and reduce the likelihood of loss. Together, these are proactive measures that directly address risk.

The other ideas touch on different topics: who would receive insurance proceeds after a claim, ownership in a company, and reinvesting dividends. None of these describe actions taken to prevent or lessen potential losses in daily life.