Question

If an individual faces the risk of economic loss in the event of property damage, this represents the principle of:

a) Risk sharing
b) Risk avoidance
c) Risk management
d) Risk transfer

Answer 1

The principle that represents an individual facing the risk of economic loss in the event of property damage is Risk transfer.

Step-by-step explanation:

The principle that represents an individual facing the risk of economic loss in the event of property damage is Risk transfer.

Risk transfer refers to the process of transferring the financial consequences of a risk to another party, typically through insurance. By purchasing an insurance policy, individuals transfer the risk of property damage to the insurance company, which will provide financial compensation if any damage occurs.

For example, if a homeowner purchases property insurance and their house is damaged due to a fire, the insurance company will cover the costs of repairing or rebuilding the property, reducing the economic loss the individual would have faced without the insurance.