The production facility for ABC Manufacturing is located in a flood pl

The production facility for ABC Manufacturing is located in a flood plain. Although the risk of flood is low, ABC’s risk manager is concerned that a flood could damage the plant and equipment.

He received bids on flood insurance from two insurance agents, but decided the cost of coverage was too high relative to the risk. So he did not purchase flood insurance. Which risk management technique is ABC using with respect to the risk of flood?
A) active retention
B) noninsurance transfer
C) passive retention
D) avoidance

ANSWER

Answer: A