Which risk control method focuses on reducing an organization's dependence on a single asset by making individual losses smaller and more predictable?

Which risk control method focuses on reducing an organization's dependence on a single asset by making individual losses smaller and more predictable?

• A. Segregation
• B. Duplication
• C. Avoidance
• D. Transference

Answer: (A)

This method focuses on reducing dependence on a single asset by separating assets so that a loss affects only a part of the overall exposure, not everything at once. By distributing assets across different locations or compartments, a single event can’t wipe out all assets; the impact stays smaller and easier to manage, making losses more predictable. For example, keeping critical components in multiple warehouses or separating key systems onto different sites ensures that damage at one location doesn’t imply total loss of capability. Duplication provides backups to continue operations, but it addresses continuity rather than reducing dependence on a single asset in a way that limits the size of each loss across the board. Avoidance eliminates the risk entirely, and transference shifts the risk to another party, neither of which specifically achieves smaller, more predictable losses through asset segregation.

This method focuses on reducing dependence on a single asset by separating assets so that a loss affects only a part of the overall exposure, not everything at once. By distributing assets across different locations or compartments, a single event can’t wipe out all assets; the impact stays smaller and easier to manage, making losses more predictable. For example, keeping critical components in multiple warehouses or separating key systems onto different sites ensures that damage at one location doesn’t imply total loss of capability.

Duplication provides backups to continue operations, but it addresses continuity rather than reducing dependence on a single asset in a way that limits the size of each loss across the board. Avoidance eliminates the risk entirely, and transference shifts the risk to another party, neither of which specifically achieves smaller, more predictable losses through asset segregation.