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Difficulty: EasyRisk Identification, Assessment, and Response Strategies

An organization purchases a comprehensive cybersecurity insurance policy to cover financial losses that may result from potential data breaches. Which of the following risk response strategies is the organization implementing?

  1. Risk transferAnswer
  2. B
    Risk avoidance
  3. C
    Risk mitigation
  4. D
    Risk acceptance

Answer

Risk transfer is the strategy of shifting potential risk and financial liability to a third party, such as through cybersecurity insurance.
Risk transfer is executed when an organization shares or shifts the responsibility for risk management and financial burden to an external third party. Obtaining a cyber insurance policy is a textbook example of transferring financial liability.

Step-by-Step Solution

1
Identify the primary action taken by the organization in the scenario.
The organization purchased a cybersecurity insurance policy to handle financial loss.
Determining the core action establishes how risk is being handled.
2
Map the action to formal risk response options.
Purchasing insurance moves the financial impact to a third-party insurer.
Sharing or moving financial liability to another entity is defined as risk transfer.

Key Concept

Risk Response Strategies (Risk Transfer)
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Topics

Risk Identification, Assessment, and Response Strategies

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