Question

The term “risk reduction” refers to:

Group of answer choices

the financial payoff from an insurance policy in the event of a loss.

the reduction in utility experienced by risk-averse individuals when they purchase insurance.

the reduction in Medicare payments that results from poor scores on patient risk measures.

actions that reduce the likelihood that an insured event occurs.

Answer 1

The correct answer is

actions that reduce the likelihood that an insured event occurs.

The term “risk reduction” refers to actions that reduce the likelihood that an insured event occurs.

Risk reduction refers to the measures or actions undertaken to mitigate/prevent/reduce the risk and the loss. There may be many risks a firm faces and it takes and prepares itself to reduce the risk well in advance, such measures taken are known as risk reduction measures.

Other options are incorrect as it is not related to any reduction in Medicare payments or  reduction in utility experienced by risk-averse individuals or payoff made by an insurance company.

Hope it helps