Which risk management method focuses on reducing or controlling potential losses?

The concept of risk reduction or control is centered around strategies that are implemented to minimize the likelihood of a loss occurring or to lessen the impact should a loss take place. This method involves identifying risks and taking proactive steps to mitigate them through safety measures, employee training, maintenance protocols, and other preventive actions.

For example, using fire suppression systems in a building is a form of risk reduction that aims to control potential fire damage. By investing in risk control measures, businesses can protect their assets and reduce the overall cost associated with claims and losses.

In contrast to other methods, such as avoidance, which entails entirely eliminating risk (often not practical or possible in many scenarios), or risk transfer, where the risk is shifted to another party (like through insurance), risk reduction focuses directly on lowering the risks associated with a given situation. This practical approach makes risk reduction a fundamental aspect of a comprehensive risk management strategy.