Which method of managing risk involves avoiding exposure altogether?

The method of managing risk that involves avoiding exposure altogether is known as avoidance. This strategy is implemented when an individual or organization decides not to engage in activities that could lead to potential risks or losses. For example, if a business evaluates that a particular project poses too much risk to its overall operations, it may choose to avoid that project completely rather than risk losses that could arise from it.

Avoidance is generally viewed as one of the most effective methods of risk management because it eliminates the risk entirely by not taking part in the activity that presents the potential danger. This proactive approach is particularly useful in scenarios where the potential consequences of a risk are severe and outweigh the benefits of the activity or operation.

In contrast, retention involves accepting the risk and potentially bearing the costs associated with it, transfer shifts the risk to another party (such as through insurance), and sharing involves distributing the risk among several parties to minimize the exposure faced by any single entity. These methods do not eliminate the risk but rather aim to mitigate or handle it in different ways.