Which of the following is NOT a traditional risk management technique for minimizing losses in insurance planning?

• A. Diversification
• B. Transfer
• C. Retention
• D. Reduction

Answer: (A)

In insurance planning, risk management relies on four traditional techniques: avoidance, reduction, retention, and transfer. Diversification isn’t one of these core methods because it doesn’t directly lower the probability or severity of a specific insured loss. Instead, diversification spreads risk across many different assets or exposures, which is a portfolio strategy rather than a direct loss-minimization method for insurance. So while diversification can reduce overall portfolio risk, it isn’t considered a traditional risk management technique for minimizing losses within the insurance planning context.