In risk management, what does "risk avoidance" entail?

Risk avoidance involves taking proactive measures to eliminate potential risks entirely by changing plans or strategies. This could mean altering a project or decision to sidestep any threats that could lead to adverse outcomes. For instance, if a business identifies that a specific venture carries a high risk of failure, it might choose not to pursue that path at all, thus avoiding the risk associated with it.

The other options do not accurately represent the concept of risk avoidance. Engaging in all possible activities would increase exposure to risk rather than avoid it. Ignoring identified potential risks does not prevent those risks from materializing, and instead, it can lead to unexpected consequences when those ignored risks evolve into problems. Reducing the impact of unavoidable risks pertains more to risk mitigation, which is a different strategy focused on lessening the consequences of risks that cannot be avoided. Thus, option C correctly captures the essence of risk avoidance by highlighting the alteration of plans to sidestep risks altogether.