IREM Certified Property Manager (CPM) Practice Test

Avoidance is the approach to risk management that focuses on completely eliminating a known risk. This can be achieved by changing plans or processes to prevent the risk from occurring. For example, if a property manager identifies a potential risk associated with a particular activity, such as hosting large gatherings that might lead to liability issues, they may choose to avoid that risk altogether by changing their policies and not allowing such events on the property.

This strategy is particularly effective when the risks are significant and the potential consequences could result in substantial losses or damages. By eliminating the activity or the element that poses the risk, the organization effectively removes the chance of potential loss from that specific risk. This proactive measure is often viewed as the most effective form of risk management.

Other approaches to risk management, such as retention, control, and transfer, involve different strategies where risks are either accepted, mitigated, or shared rather than fully eliminated. Each has its own place in a comprehensive risk management plan, but avoidance specifically targets the removal of risk at its source.