What term describes the measures taken by an insurance company to manage exposure to loss?

• A. Risk Assessment
• B. Risk Management
• C. Loss Control
• D. Underwriting

Answer: (B)

The correct term that describes the measures taken by an insurance company to manage exposure to loss is risk management. This encompasses a broad range of strategies and processes designed to identify, evaluate, and mitigate potential risks that could lead to losses. Risk management can involve various activities, such as developing policies to minimize risk, implementing safety measures, and maintaining loss prevention practices to reduce the likelihood of claims.

This term goes beyond assessing risks; it includes the subsequent actions an insurer might take to manage those risks effectively, aiming to protect both the insurance company’s financial standing and its policyholders. By using a comprehensive risk management approach, companies can better navigate uncertainties and reduce their exposure to potential losses.

The other terms may be related but do not capture the full scope of actions involved in managing exposure to loss in the same way. Risk assessment focuses primarily on identifying and analyzing risks, while loss control involves specific strategies aimed at reducing frequency and severity of losses. Underwriting mainly deals with the evaluation of risk and the terms of coverage being offered to clients.