IREM Certified Property Manager (CPM) Practice Test 2025 – All-in-One Guide to Exam Success!

Question: 1 / 400

What is the characteristic of the retention approach in risk management?

Acceptance of the associated risks

The retention approach in risk management is characterized by the acceptance of the associated risks. This method involves making a conscious decision to retain certain risks rather than transferring them to another party, minimizing, or eliminating them. Property managers or organizations may choose to retain risks when the potential impact of the risk is manageable, when the costs associated with transferring or mitigating the risk are too high, or when the organization has sufficient resources to deal with potential losses.

In this context, retention can reflect a strategic decision where the risk is deemed acceptable, often because it may occur infrequently or result in a manageable loss. This does not mean ignoring risks, but rather assessing them and deciding that the best course of action is to accept them. This approach aligns well with the financial management objectives of property management, allowing for potential cost savings while still acknowledging and preparing for possible outcomes.

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Taking action to reduce loss exposure

Elimination of a known risk

Transfer of risk to a professional

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