Choosing to insure against the risk of theft is an example of which risk management strategy?

Choosing to insure against the risk of theft exemplifies the risk management strategy of transferring risk. This approach involves shifting the financial burden of a potential loss to another party, in this case, the insurance company. By purchasing insurance, an individual or organization pays a premium to the insurer, who then assumes the responsibility for the financial impact of theft, should it occur. This strategy is particularly useful for managing risks that are unpredictable but could have significant financial consequences.

In contrast, the other strategies focus on different approaches to risk management. Avoiding risk entails altering plans to sidestep potential threats, retaining risk means accepting the risk and its consequences, and mitigating risk involves taking steps to reduce the likelihood or impact of a risk event. Each of these strategies operates under different principles, making transferring risk uniquely suited to situations where risk is handled through insurance or contractual agreements.