A vending company installed a new top of the line security system with an expectation of fewer thefts. Which statement is true?

A vending company installed a new top of the line security system with an expectation of fewer thefts. Which statement is true?

• A. Higher expected losses.
• B. Increased residual uncertainty.
• C. Increased anxiety.
• D. Less residual uncertainty.

Answer: (D)

Introducing a stronger loss-control measure changes the risk landscape by reducing the likelihood of a theft and the potential loss that could occur. Residual uncertainty is the amount of unpredictability that remains after controls are in place. When the security system lowers the chance of theft and limits the possible losses, the range of possible outcomes narrows, so there is less uncertainty left to contend with. In other words, there’s less residual uncertainty after implementing the security system, even though some risk always remains due to factors like system limitations or unforeseen events. Higher expected losses wouldn’t fit, because stronger security decreases the expected impact, not increases it. Increased residual uncertainty would imply more unpredictability after the control, which isn’t the case here. Increased anxiety isn’t addressing the risk-management concept at play.

Introducing a stronger loss-control measure changes the risk landscape by reducing the likelihood of a theft and the potential loss that could occur. Residual uncertainty is the amount of unpredictability that remains after controls are in place. When the security system lowers the chance of theft and limits the possible losses, the range of possible outcomes narrows, so there is less uncertainty left to contend with. In other words, there’s less residual uncertainty after implementing the security system, even though some risk always remains due to factors like system limitations or unforeseen events.

Higher expected losses wouldn’t fit, because stronger security decreases the expected impact, not increases it. Increased residual uncertainty would imply more unpredictability after the control, which isn’t the case here. Increased anxiety isn’t addressing the risk-management concept at play.