Certified Manager of Community Associations (CMCA) Practice Test – Prep & Study Guide

The primary purpose of segregation of exposures in risk management is to establish a backup to prevent loss. By segregating exposures, a community association can effectively isolate potential risks rather than having them all concentrated in one area. This approach allows for better management of risks by creating structured systems or alternatives to protect assets and reduce the chance of a total loss.

If one exposure is compromised, having segregation means that other areas can continue to function without being affected. This practice is critical in risk management because it enhances the organization’s ability to respond to and recover from adverse situations, thus safeguarding the overall stability and functionality of the community association.

While legal compliance, transferring financial burdens to insurance, and enhancing quality of community services are important aspects of community association management, they are not the core focus of segregation of exposures. The primary goal is to ensure risk is compartmentalized, which ultimately helps in loss prevention and recovery operations.