Casualty Actuarial Society (CAS) Practice Exam

Protection in risk management typically refers to techniques designed to mitigate or lessen the likelihood or impact of potential losses. This encompasses a broad range of strategies including risk avoidance, risk reduction, risk transfer (such as through insurance), and risk acceptance. By focusing on reducing potential adverse effects, organizations can better safeguard their assets, ensure business continuity, and maintain operational effectiveness.

The other options, while related to aspects of risk management, do not fully capture the essence of what protection entails in this context. Insurance policies might cover certain risks, but they do not universally cover all types of risks, nor do they specifically define protection as a risk management technique. Strategies aimed solely at environmental risks, while important, represent only a subset of the broader risk management field. Regulatory measures help ensure compliance and safety but are not directly classified under the protective techniques used to manage risks. Therefore, the emphasis on reducing the likelihood or impact of losses accurately reflects the core principle of protection in risk management.