Hawaii Insurance License Practice Exam 2025 – All-in-One Resource to Ace Your Licensure!

Question: 1 / 400

Which of the following is an example of a risk management technique?

Ignoring risks

Diversifying investments

Diversifying investments is a fundamental risk management technique because it involves spreading investments across various assets, sectors, or geographical areas to reduce exposure to any single investment or risk. By doing so, if one investment underperforms, others may perform well, thus mitigating potential losses. This approach helps to ensure that the overall investment portfolio is less volatile and more stable over time, showcasing a proactive strategy to manage financial risk.

Utilizing this technique effectively can lead to better long-term financial outcomes and is a well-established practice in both personal finance and corporate finance. It reflects an understanding that risk can be managed through smart strategic choices rather than avoided entirely.

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Maximizing insurance coverage

Acquiring more assets

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