Question

The risk management strategy where the cost of a realized risk is assigned to someone else is known as risk _________________.

a) Mitigation
b) Acceptance
c) Transference
d) Avoidance

Answer 1

Risk transference is a risk management strategy by which the potential consequences of a risk are shifted to a third party, such as through insurance or contracts.

Step-by-step explanation:

The risk management strategy where the cost of a realized risk is assigned to someone else is known as risk transference. Risk transference is a strategy used in risk management that involves shifting the potential consequences and associated financial burden of a risk to a third party. This can be done through various methods, such as purchasing insurance or entering into a contractual agreement where another party agrees to assume the risk.

Other strategies for handling risk include risk mitigation, which is the process of reducing the impact or likelihood of a risk, risk acceptance, which involves acknowledging and deciding to tolerate the risk without taking steps to address it, and risk avoidance, which is the decision to alter plans to circumvent the risk altogether.