High Frequency, High Severity results in which approach?

• A. Risk transfer
• B. Loss Prevention
• C. Insurance
• D. Avoidance (DUI)

Answer: (D)

The main idea is that when a risk happens frequently and can cause very large losses, the most effective response is to avoid the exposure entirely. If a risk occurs often and the potential damage is severe, trying to prevent it or transfer it through insurance often isn’t cost-effective or reliable enough to justify taking on the exposure. Loss prevention can reduce some risk but won’t eliminate the chance of a frequent, high-impact event. Insurance shifts the financial burden but doesn’t stop the event from occurring and can become prohibitively expensive or leave residual risk. By avoiding the activity or source of the risk—such as not engaging in a behavior like DUI—you remove the exposure completely, which is how you handle high-frequency, high-severity risks.