Which of the following is an example of a proactive risk management strategy?

Conducting regular preventive maintenance and inspections exemplifies a proactive risk management strategy because it involves taking systematic measures to identify and address potential issues before they escalate into significant problems. By regularly assessing the condition of the property and servicing it as needed, property managers can minimize the risk of costly repairs, tenant dissatisfaction, and safety hazards. This forward-thinking approach helps maintain property value, enhances tenant retention, and ultimately contributes to a more stable investment.

In contrast, waiting for tenant complaints before addressing issues is a reactive approach, responding only after problems have arisen. Setting high rents to deter problematic tenants may not effectively manage risks and could limit the pool of potential tenants. Ignoring market trends is detrimental as it leaves properties vulnerable to shifts that could affect occupancy rates and rental income. Utilizing proactive strategies like preventive maintenance serves to mitigate risks effectively and sustain a healthy real estate investment.