Discount Department Stores is a national retail chain.The company had one large,central warehouse.At the suggestion of the risk manager,the company decided to build four smaller regional warehouses so that a loss at the central warehouse would not be a catastrophic blow to the company's distribution system.Splitting the inventory between four regional warehouses illustrates which risk management technique?

Question

Quizplus · Accepted Answer

Splitting the inventory between four regional warehouses is an example of loss reduction, as it reduces the potential impact of a loss at the central warehouse. This technique aims to minimize the severity of the loss rather than eliminate the risk altogether (risk avoidance) or shift the risk to another party (risk transfer). Loss prevention, on the other hand, focuses on preventing losses from occurring in the first place.

Discount Department Stores Is a National Retail Chain