Main Street Corp. purchasing liability and property insurance illustrates which risk management method?

When Main Street Corp. purchases liability and property insurance, it is effectively transferring the financial risk associated with potential losses to the insurance company. This action allows the corporation to protect itself from the costs that could arise from claims and damages, thereby managing its exposure to risky situations.

By obtaining insurance, Main Street Corp. ensures that in the event of a loss, the insurance company takes on the financial responsibility for those losses up to the limits of the policy. This is a strategic risk management method that allows the company to operate with greater peace of mind, knowing that it has mitigated potential financial burdens that could significantly impact its operations.

In this context, other risk management methods like risk avoidance, which involves eliminating the risk altogether, would not apply since the corporation is willing to engage in activities that carry risk but chooses to limit its financial exposure through insurance. Risk retention would imply the company is assuming the risk itself, and risk sharing would suggest collaboration with others to bear the risk, which does not align with the scenario of transferring risk to an insurer. Thus, the correct answer is clearly aligned with risk transfer as the primary method being illustrated.