Tom buys his wife Mary a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box at a local bank. This is an example of risk?

In this scenario, the act of keeping the $50,000 diamond ring in a safe deposit box exemplifies risk reduction. By securely storing the ring when it is not being worn, Mary is taking proactive steps to minimize the risk of loss or theft.

Risk reduction involves implementing measures that decrease the potential for loss. In this case, the choice of a safe deposit box provides a controlled environment that is typically more secure than keeping the ring at home or in an unsecured location. This enhances its protection against damage or unauthorized access.

While avoidance, retention, and transference involve different strategies related to handling risks, they do not accurately describe the action of securely storing the ring to lessen the chances of incurring a loss. Thus, by opting to keep the ring in a safe deposit box, the overall risk associated with ownership is decreased, demonstrating effective risk reduction.