Final answer:
a) Risk avoidance
The pre-loss goal of tolerable uncertainty, which accepts a certain amount of risk, may conflict with risk avoidance strategies that aim to eliminate risk entirely. This can lead to a collision of approaches, especially when the risk in question can have devastating consequences, necessitating a shift towards more conservative risk mitigation strategies.
Step-by-step explanation:
The pre-loss goal of tolerable uncertainty in risk management may conflict with risk avoidance strategies. While tolerable uncertainty accepts a certain degree of risk without action, risk avoidance seeks to eliminate the risk entirely. This can lead to a conflict, as the complete avoidance of risk may not be possible or may require excessive resources, hence clashing with the acceptance of some level of uncertainty deemed to be tolerable.
For instance, a business may decide to tolerate some risk of data loss by regularly backing up data instead of entirely avoiding the risk by never using digital data storage. However, if a potential threat is deemed catastrophic, such as a significant cyber-attack, the business may shift towards a more conservative approach, including extensive protective measures that lean towards risk avoidance.
Ultimately, the choice between tolerating some uncertainty or pursuing risk avoidance depends on the assessment of potential threats and the appetite for risk. The balance of adopting Plan A or the conservative Plan B as mentioned in Figure 20.1, relates to the company's willingness to bear uncertainty or take comprehensive steps to mitigate risks, even if those risks have a low probability of occurring but could have debilitating consequences.