Match each organizational decision or action to the fundamental risk handling method it demonstrates.
- A retail boutique chain chooses to pay for any shattered storefront windows out of its own operating budget rather than purchasing glass breakage coverage.Risk Retention
- A municipal transit authority permanently discontinues its late-night express routes due to the severe threat of passenger altercations.Risk Avoidance
- A manufacturing facility mandates daily machinery calibration and requires operators to wear specialized protective gear.Risk Reduction
- A property developer requires all contractors to sign an indemnification agreement, placing the financial responsibility for accidents on the contractors.Risk Transfer
- A coalition of regional healthcare clinics establishes a cooperative mechanism to pool resources and distribute the financial impact of liability claims equally.Risk Sharing
Answer
Retail boutique matches with Risk Retention; Transit authority matches with Risk Avoidance; Manufacturing facility matches with Risk Reduction; Property developer matches with Risk Transfer; Healthcare clinics match with Risk Sharing.
Each scenario flawlessly aligns with one of the five STARR methods of handling risk: Sharing involves pooling exposures among similar entities, Transfer shifts the financial burden (either through insurance or contracts), Avoidance eliminates the exposure entirely by halting the activity, Reduction mitigates the severity or frequency of loss while continuing operations, and Retention assumes the financial consequences internally.
Step-by-Step Solution
Key Concept
The five fundamental methods of handling risk (STARR).