Final answer:
The correct answer is 'certainty risk' because it is not a recognized category of risk when a firm is evaluating the potential downsides of moving functions to a third party. Standard risks considered include operational, financial, and reputational risks.
Step-by-step explanation:
In evaluating the risks associated with moving a function to a third party, firms typically consider operational, financial, and reputational risks. Among the options provided, 'certainty risk' is not a standard term used to describe a risk to the firm in the context of outsourcing or third-party engagements. The correct risks are:
- Operational risk refers to the potential for losses resulting from inadequate or failed internal processes, people, systems, or external events when engaging with third parties.
- Financial risk involves the potential financial losses that a firm might suffer, including those related to the costs of third-party services or the impact of their failure on the company's finances.
- Reputational risk is the chance that a firm's reputation could be harmed if a third party fails to meet expectations or engages in activities that are not aligned with the firm's values or the expectations of its stakeholders.
Therefore, the correct answer is 'c) Certainty risk', as it is not a recognized category of risk in this context.