Firestone and Ford recalled thousands of tires when several people died in traffic accidents blamed on faulty tires. This is an example of which of the following?
A) Avoiding the risk
B) Self-insuring against the risk
C) Reducing the risk
D) A loss-prevention program

Question

Quizplus · Accepted Answer

The recall by Firestone and Ford is an example of risk reduction because they took steps to eliminate or mitigate the risk of accidents caused by faulty tires. Avoiding the risk would involve not engaging in the activity that poses the risk (in this case, selling the tires). Self-insuring against the risk would involve absorbing the financial consequences of the risk rather than taking action to eliminate it. A loss-prevention program involves an ongoing effort to identify and mitigate risks before they result in losses, whereas the recall is a specific action taken in response to a known risk.

Firestone and Ford Recalled Thousands of Tires When Several People