What is the purpose of risk avoidance as a risk management technique?

Risk avoidance is primarily focused on the complete elimination of risk in a given situation. This technique involves altering plans to sidestep potential exposure to risks entirely, rather than dealing with the consequences after they occur. For instance, if a business identifies a specific activity that poses a high likelihood of financial loss or safety issues, they may decide not to engage in that activity at all. This proactive approach can be particularly effective in circumstances where risks pose significant threats.

While transferring risk (like purchasing insurance), accepting risk (acknowledging it without taking further action), or reducing the consequences (implementing measures to lessen the effects should the risk occur) are all valid risk management strategies, they do not represent the essence of risk avoidance. In contrast, risk avoidance aims to find ways to completely sidestep the risk rather than merely managing it in any form.