The process of evaluating and addressing risk by analyzing exposures and designing protective programs is called what?

• A. Insurance marketing
• B. Claims processing
• C. Underwriting
• D. Risk management

Answer: (D)

Risk management is the systematic process of identifying and evaluating exposures to loss and then designing protective programs to address them. It starts by spotting what could go wrong—properties, people, finances, or operations that could be harmed—and assessing how likely those events are and how severe their impact could be. With that understanding, you implement controls to prevent or reduce losses and use other methods, such as transferring risk through insurance, to fund or share potential costs. This broad, proactive approach to both analyzing risk and creating protective actions is what makes risk management the best description here.

Insurance marketing focuses on selling policies, not evaluating risks or creating protective programs. Claims processing deals with losses after they occur. Underwriting evaluates and prices risk to determine policy eligibility, which is a part of risk assessment but does not encompass designing protective programs across exposures.