An effective risk management strategy may include which of the following?

An effective risk management strategy can indeed include risk avoidance. This strategy focuses on eliminating potential risks by avoiding the activities or situations that create them. By not engaging in an activity that is deemed too risky, an organization can protect its assets and operations from possible threats, thereby enhancing security and reducing the likelihood of adverse outcomes.

For example, a company may decide not to implement a specific technology or enter a market if the risks associated with those choices outweigh the potential benefits. This proactive approach can help organizations maintain stability and alignment with their overall risk appetite.

While other strategies like risk acceptance, risk transference, and risk dilution are relevant in the context of risk management, they do not focus on eliminating the risk itself. Risk acceptance involves acknowledging the risk and deciding to proceed anyway, risk transference shifts the burden of the risk to another party (like through insurance), and risk dilution spreads the risk across various areas to minimize impact. Therefore, risk avoidance stands out as a direct method of reducing risk exposure.