A small business that buys a fire insurance policy on the equipment in its corrugated box factory is relying on a risk ________ strategy.

Question

Quizplus · Accepted Answer

The small business is transferring the risk of potential damage to its equipment in the corrugated box factory by purchasing a fire insurance policy. This means that if there is a fire that damages the equipment, the insurance company will bear the financial burden of repairs or replacement. Therefore, the small business is relying on a risk transfer strategy.

A Small Business That Buys a Fire Insurance Policy on the Equipment