General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An employer's workplace wellness and smoking-cessation program illustrates which risk management technique?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Wellness and smoking-cessation programs reduce the frequency and severity of future medical claims by improving employee health, which is loss reduction or loss control. Unlike transfer, the employer keeps the risk but shrinks it; unlike retention alone, it actively intervenes to lower expected losses. Reduction is often paired with insurance to make the remaining risk more affordable.
Why the other options are wrong
- B) Transfer shifts risk to an insurer; the wellness program does not shift anything.
- C) Retention merely accepts the risk; the program actively reduces it.
- D) Avoidance eliminates the risk-creating activity; employees still work and still face illness.
Memory hook
Reduction = shrink the loss before it happens. Wellness now, cheaper claims later.