Lauren is studying the two major components of risk management within an aviation business. Which of the following correctly describes these components?

Question

BlackTom AI · Accepted Answer

Consider the topic of risk management in an aviation business and what its two major components typically are. 
Option 1: 'Risk reduction through careful conduct of business activities, and risk transfer by purchasing insurance to shift some risks to another entity.' This aligns with standard risk management practice: reducing risk through prudent operations and transferring residual risk via insurance or contracts. 
Option 2: 'Risk stabilization through increasing inventory levels during seasonal fluctuations.' While inventory planning can be part of operational risk control in some contexts, risk stabilization through inventory is not a primary or defining component of aviation risk management; it focuses more on supply chain or stock levels rather than overall risk management strategy. 
Option 3: 'Risk redistribution through assigning different managers to rotate responsibility for operational hazards.' Rotating managers is not a recognized core risk management component; it risks diffusion of accountability and does not systematically address hazard control or risk transfer. 
Option 4: 'Risk evaluation through comparing competitor pricing and adjusting fees accordingly.' Comparing competitor pricing is a market/competitive analysis activity, not a risk management component unless tied to financial risk strategy, but on its own it does not describe the core principles of risk management in aviation. 
In summary, option 1 describes the established dual approach of mitigating risk through conduct and transferring risk via insurance, while options 2–4 describe activities that are not central to the two major components of risk management in aviation.

FA25: AVIA-78 Sec 01 - Intro Aviation Mgmt Final Exam (In Class Only)

Lauren is studying the two major components of risk management within an aviation business. Which of the following correctly describes these components?

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