Which risk response relieves the enterprise of risk ownership?

Which risk response relieves the enterprise of risk ownership?

• A. Mitigation
• B. Avoidance
• C. Transference
• D. Acceptance

Answer: (B)

The correct response is transference, as this approach effectively shifts the risk ownership from one party to another, thus relieving the enterprise of direct responsibility for that risk. This is often achieved through mechanisms such as insurance, outsourcing, or contractual agreements, where another party assumes the risk. For example, when a company purchases insurance for potential data breaches, the financial impact of such a breach is transferred to the insurance company. This allows the enterprise to reduce its exposure to that risk, effectively relieving it of the burden of managing the risk directly. In contrast, mitigation involves taking steps to reduce the impact or likelihood of a risk but does not eliminate ownership of the risk itself. Avoidance entails changing plans to sidestep the risk entirely, thus avoiding any potential consequences, but the enterprise still recognizes the existence of the risk, even if it's not engaged with it. Lastly, acceptance means recognizing the risk and making a conscious decision to bear it without additional measures, which does not transfer the risk away from the enterprise. These approaches do not relieve the enterprise of risk ownership in the way transference does.

The correct response is transference, as this approach effectively shifts the risk ownership from one party to another, thus relieving the enterprise of direct responsibility for that risk. This is often achieved through mechanisms such as insurance, outsourcing, or contractual agreements, where another party assumes the risk.

For example, when a company purchases insurance for potential data breaches, the financial impact of such a breach is transferred to the insurance company. This allows the enterprise to reduce its exposure to that risk, effectively relieving it of the burden of managing the risk directly.

In contrast, mitigation involves taking steps to reduce the impact or likelihood of a risk but does not eliminate ownership of the risk itself. Avoidance entails changing plans to sidestep the risk entirely, thus avoiding any potential consequences, but the enterprise still recognizes the existence of the risk, even if it's not engaged with it. Lastly, acceptance means recognizing the risk and making a conscious decision to bear it without additional measures, which does not transfer the risk away from the enterprise. These approaches do not relieve the enterprise of risk ownership in the way transference does.