Which statement is correct regarding applying risk control techniques to various types of loss exposures?

Which statement is correct regarding applying risk control techniques to various types of loss exposures?

• A. The most cost-effective risk control techniques for personnel loss exposures are those aimed at causes of loss that occur outside the workplace.
• B. Any measure that controls property, liability, or personnel loss exposures also indirectly controls associated net income loss exposures.
• C. Separation, duplication, and diversification are the most effective risk control techniques for treating liability loss exposures.
• D. Risk control techniques to reduce a liability loss once it occurs are generally not available.

Answer: (B)

Risk control measures that reduce losses in property, liability, or personnel exposures also lower potential net income losses, because net income is affected by all the ways losses can disrupt the business. When you cut property losses, you also reduce business interruption and extra expenses that would hit net income. Reducing personnel losses cuts payroll costs, downtime, and production delays that would otherwise reduce earnings. Lowering liability losses reduces defense costs, settlements, and related expenses, which again stabilizes or improves net income. So any effective control across these exposure types tends to benefit net income as well. The other statements miss this broader link. Focusing on causes of personnel losses outside the workplace ignores effective in‑workplace controls that are typically more cost-efficient. Treating liability exposures as best handled by separation, duplication, and diversification overlooks other strong liability strategies like risk transfer, safety programs, and claims management. And there are practical risk-control options to reduce liability losses after they occur, such as effective claims handling and settlement practices.

Risk control measures that reduce losses in property, liability, or personnel exposures also lower potential net income losses, because net income is affected by all the ways losses can disrupt the business. When you cut property losses, you also reduce business interruption and extra expenses that would hit net income. Reducing personnel losses cuts payroll costs, downtime, and production delays that would otherwise reduce earnings. Lowering liability losses reduces defense costs, settlements, and related expenses, which again stabilizes or improves net income. So any effective control across these exposure types tends to benefit net income as well.

The other statements miss this broader link. Focusing on causes of personnel losses outside the workplace ignores effective in‑workplace controls that are typically more cost-efficient. Treating liability exposures as best handled by separation, duplication, and diversification overlooks other strong liability strategies like risk transfer, safety programs, and claims management. And there are practical risk-control options to reduce liability losses after they occur, such as effective claims handling and settlement practices.