Which method of managing risk involves eliminating exposure to that risk?

Avoidance is the method of managing risk that involves completely eliminating exposure to that risk. This can include strategies such as refraining from engaging in activities that could lead to potential hazards or risks. For example, if a company identifies that a certain business venture carries a significant risk that outweighs potential benefits, it may choose not to pursue that venture at all, thereby avoiding any possible negative consequences associated with it.

This approach is seen as one of the most effective means of risk management because it removes any possibility of loss or damage associated with the identified risk. In contrast, other methods such as transfer, sharing, and retention deal with risk in different ways, such as passing it on to another party, spreading it out, or accepting it while making plans to deal with any potential consequences. Thus, avoidance directly addresses the risk by sidestepping it altogether, making it the correct choice in this context.