Segregation of exposures is a risk control technique that involves:

• A. Eliminating all external threats
• B. Establishing backups such as offsite data backups or spare parts
• C. Increasing insurance limits
• D. Outsourcing all critical functions

Answer: (B)

Segregation of exposures means separating critical assets, locations, or processes so that a problem in one area doesn’t affect others, creating independent recovery paths. Establishing backups such as offsite data backups or spare parts is a direct application of this idea because it provides separate, protected reserves that can be used if the primary system or location is compromised, helping keep operations running despite a disruption. The other options don’t fit this concept: eliminating all external threats isn’t feasible and is about avoidance rather than creating independent recovery paths; increasing insurance limits shifts risk transfer rather than reducing exposure through separation; outsourcing all critical functions introduces new external dependencies rather than isolating exposures.