What term describes the strategy of eliminating exposure to potential loss?

The term that describes the strategy of eliminating exposure to potential loss is avoidance. This strategy involves taking steps to completely eliminate the risk associated with a particular situation or activity. For example, if a business recognizes that a certain operation could result in significant financial loss, it may choose to stop that operation altogether, thereby avoiding the associated risk.

Avoidance is fundamentally about choosing not to engage in activities that could lead to loss, thereby removing the possibility of risk entirely. By opting for avoidance, individuals or organizations proactively eliminate scenarios that carry potential negative consequences rather than simply managing or transferring the risk.

In contrast, retention refers to accepting the risk and bearing the potential loss, insurable interest pertains to a legal requirement that one has a legitimate interest in the subject matter of insurance, and indemnity relates to the compensation for loss or damage. These concepts involve different approaches to risk management rather than completely eliminating exposure to loss.