Insurance Broker Certification Practice Exam

Which of the following would NOT constitute an activity in risk management?

1. Driving safely

2. Eliminating the risk by not driving

3. Purchasing car insurance

4. Investing in a new vehicle

The correct answer is: Investing in a new vehicle

Investing in a new vehicle does not directly relate to risk management in the context of mitigating or transferring risk. Risk management involves identifying, assessing, and taking steps to reduce or manage risks associated with potential losses. The other options clearly illustrate actions taken to manage risk effectively. Driving safely involves behaviors intended to reduce the risk of accidents and injuries while on the road. Eliminating the risk by opting not to drive entirely removes the potential for any driving-related incidents, thus addressing risk head-on. Purchasing car insurance is a key component of risk management as it shifts the financial burden associated with accidents to the insurance provider, thereby reducing the monetary impact on the driver. In contrast, investing in a new vehicle may improve safety or reliability but does not inherently manage risk related to driving itself. This activity is more related to asset acquisition rather than the direct management of risk.