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Difficulty: MediumMethods of Handling Risk

Summit Peaks Outfitters, an outdoor recreation company, is reviewing its operational risks. Management has implemented several new protocols to address potential losses. Which of the following actions specifically represent the risk handling method of Risk Reduction? (Select all that apply)

  1. Mandating that all guided rafting participants wear Coast Guard-approved personal flotation devices.Answer
  2. B
    Permanently canceling all winter ice-climbing tours to completely eliminate the exposure to avalanche hazards.
  3. C
    Requiring clients to sign a hold-harmless agreement that shifts legal liability away from the outfitter.
  4. Installing GPS tracking and automated emergency communication beacons on all company watercraft.Answer

Answer

The correct actions are mandating safety gear (personal flotation devices) and installing emergency communication systems (GPS beacons), as both actions lessen the severity of a loss.
Risk reduction involves implementing proactive measures to lessen the frequency or severity of a loss while still engaging in the risk-bearing activity. Requiring safety equipment (flotation devices) and installing emergency tracking systems (GPS beacons) perfectly illustrate this concept because they mitigate the impact of potential accidents on the water without stopping the business operations.

Step-by-Step Solution

1
Define the specific risk handling method requested in the question.
Risk reduction is identified as taking proactive steps to lessen the severity or frequency of a loss without completely ceasing the activity.
Establishing the exact definition is necessary to accurately evaluate each provided scenario.
2
Categorize each of the outfitter's operational changes into the appropriate STARR method.
Safety gear and GPS beacons are Reduction. Canceling tours is Avoidance. Hold-harmless agreements are Transfer.
Comparing each action against the standard STARR framework prevents confusing closely related risk management techniques.
3
Isolate the actions that exclusively represent risk reduction.
The options describing the life jackets and GPS beacons are correctly identified.
The prompt specifically asks to select only the reduction methods.

Key Concept

Risk Reduction vs. Other STARR Methods
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Topics

Methods of Handling Risk

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