Which two risk control techniques are directly aimed at reducing the severity of net income losses?

Which two risk control techniques are directly aimed at reducing the severity of net income losses?

• A. Separation and Diversification
• B. Separation and Duplication
• C. Duplication and Diversification
• D. Loss Prevention and Life Safety

Answer: (B)

The key idea is to minimize how bad earnings can drop after a loss by building redundancy and spreading exposure. Separation keeps critical assets, facilities, or processes apart so a single event can’t cripple a large portion of operations. Duplication creates backups or spare capacity, allowing the business to continue with little interruption if part of the system is damaged. Together, these two directly reduce the severity of net income losses by ensuring the business can keep functioning and generating revenue even after a disruption. Diversification helps avoid concentrating risk across products or locations, but it doesn’t target the size of the earnings drop from a single incident as directly. Loss prevention and life safety aim more at avoiding losses or limiting physical damage rather than preserving earnings after a loss occurs.

The key idea is to minimize how bad earnings can drop after a loss by building redundancy and spreading exposure. Separation keeps critical assets, facilities, or processes apart so a single event can’t cripple a large portion of operations. Duplication creates backups or spare capacity, allowing the business to continue with little interruption if part of the system is damaged. Together, these two directly reduce the severity of net income losses by ensuring the business can keep functioning and generating revenue even after a disruption. Diversification helps avoid concentrating risk across products or locations, but it doesn’t target the size of the earnings drop from a single incident as directly. Loss prevention and life safety aim more at avoiding losses or limiting physical damage rather than preserving earnings after a loss occurs.