Which statement most accurately describes the effect of duplication on loss characteristics?

Which statement most accurately describes the effect of duplication on loss characteristics?

• A. Duplication tends to make losses less predictable, but more manageable.
• B. Duplication reduces loss severity without increasing loss frequency.
• C. Duplication tends to increase an organization's dependence on a single asset or activity.
• D. Duplication is an easy and inexpensive way to reduce loss frequency.

Answer: (B)

Duplication introduces redundancy for critical assets or processes, so when one component fails you have a backup ready to take over. That keeps operations running with less disruption, which lowers the severity of a loss—think of shorter downtime, smaller financial impact, or less service disruption. However, duplication doesn’t change the underlying likelihood that a loss event could occur in the first place—the hazard exposure is still present—so the loss frequency isn’t reduced by duplicating assets. In fact, duplicating can be costly to implement and maintain, so it isn’t described as easy or inexpensive. This is why statement that duplication reduces loss severity without increasing loss frequency best captures its effect on loss characteristics.

Duplication introduces redundancy for critical assets or processes, so when one component fails you have a backup ready to take over. That keeps operations running with less disruption, which lowers the severity of a loss—think of shorter downtime, smaller financial impact, or less service disruption. However, duplication doesn’t change the underlying likelihood that a loss event could occur in the first place—the hazard exposure is still present—so the loss frequency isn’t reduced by duplicating assets. In fact, duplicating can be costly to implement and maintain, so it isn’t described as easy or inexpensive. This is why statement that duplication reduces loss severity without increasing loss frequency best captures its effect on loss characteristics.