A construction company raises pay to the 90th percentile of market wages to retain workers. This is an example of which risk management strategy?

The correct answer is mitigation. When a construction company raises pay to the 90th percentile of market wages, it is proactively addressing the risk of employee turnover and the subsequent loss of talent. This strategy aims to reduce the potential negative impacts associated with high attrition rates by making the company more competitive in the job market. By offering higher wages, the company is attempting to retain its workforce and decrease the risk of disruption to operations that can arise from losing skilled labor.

Mitigation involves taking proactive steps to reduce the likelihood or impact of a risk. In this case, by increasing wages, the company reduces the risk of turnover by making it less likely that employees will leave for better-paying opportunities elsewhere. This is a common approach in human resource management for retaining talent, particularly in industries with high competition for skilled workers, such as construction.

The other options do not apply in this context. Avoidance involves eliminating the risk entirely, acceptance means acknowledging the risk without taking proactive steps to address it, and transference refers to shifting the risk to another party (like through insurance). The action taken by the construction company specifically aims to lower the risk rather than avoiding or transferring it.