The management of a leisure company, who are risk averse, have just approved an investment in a new amusement park. The country in which the amusement park will be located has a warm and mostly dry climate throughout the year.
A number of specific risks related to this investment have been identified as follows.
(1) Losses of very small amounts of revenue due to poor weather.
(2) A significant financial liability may arise due to the injury of a member of the public.
(3) Loss of several days of revenue due to rides being unavailable because of poor maintenance routines.
(4) Income fraud as a consequence of the high levels of cash handled by employees.
Using the TARA framework, which is the most appropriate way of managing each of these risks?
- Transfer risk 1; accept risk 2; avoid risk 3; reduce risk 4
- Accept risk 1; avoid risk 2; transfer risk 3; reduce risk 4
- Accept risk 1; transfer risk 2; avoid risk 3; reduce risk 4
- Reduce risk 1; transfer risk 2; avoid risk 3; accept risk 4