Which risk response strategy shifts risk to a third party, like purchasing cybersecurity insurance? Learn how risk transference works and why it’s essential for managing cyber threats—key knowledge for CompTIA Security+ (Plus) SY0-701 exam success.
Table of Contents
Question
Which risk response strategy involves shifting the risk to a third party, such as purchasing cybersecurity insurance?
A. Risk mitigation
B. Risk acceptance
C. Risk transference
D. Risk avoidance
E. Risk reduction
Answer
C. Risk transference
Explanation
Transferring risk means passing the impact of risk to another entity, like an insurer.
The risk response strategy that involves shifting risk to a third party, such as by purchasing cybersecurity insurance, is risk transference.
Risk transference is a risk management approach where an organization shifts the financial and operational impact of certain risks to another entity, typically through contractual agreements or insurance policies.
In cybersecurity, this often takes the form of purchasing cyber insurance, which covers costs associated with incidents like data breaches, ransomware attacks, or business interruptions. The insurance provider or third party assumes the financial burden if the risk materializes.
Risk transference does not eliminate the underlying risk; instead, it ensures that another party bears the financial consequences, allowing the organization to focus on core operations and resilience.
Other examples include outsourcing certain IT functions to vendors with service-level agreements (SLAs) that specify liability, or using cloud providers who accept responsibility for specific security risks.
This strategy is distinct from risk mitigation (reducing risk), risk avoidance (eliminating risk), and risk acceptance (choosing to bear the risk internally).
Risk transference shifts the financial impact of risks to a third party, such as an insurer, through mechanisms like cybersecurity insurance or contractual agreements, providing a safety net for organizations facing complex or costly risks.
CompTIA Security+ (Plus) SY0-701 certification exam practice question and answer (Q&A) dump with detail explanation and reference available free, helpful to pass the CompTIA Security+ (Plus) SY0-701 exam and earn CompTIA Security+ (Plus) SY0-701 certification.