CGRC · Question #55
You are the project manager for a construction project. The project includes a work that involves very high financial risks. You decide to insure processes so that any ill happening can be…
The correct answer is A. Transfer. Insuring processes to compensate for potential financial losses is a risk transfer strategy. This approach shifts the financial burden of a risk to a third party, such as an insurance company.
Question
You are the project manager for a construction project. The project includes a work that involves very high financial risks. You decide to insure processes so that any ill happening can be compensated. Which type of strategies have you used to deal with the risks involved with that particular work? Response:
Options
- ATransfer
- BMitigate
- CAccept
- DAvoid
How the community answered
(26 responses)- A77% (20)
- B4% (1)
- C15% (4)
- D4% (1)
Why each option
Insuring processes to compensate for potential financial losses is a risk transfer strategy. This approach shifts the financial burden of a risk to a third party, such as an insurance company.
Insuring processes to cover potential financial risks is a classic example of risk transfer, where the financial responsibility for potential losses is shifted to an external entity, typically an insurance company.
Mitigation involves taking actions to reduce the probability or impact of a risk event, such as implementing stronger controls.
Acceptance means consciously deciding to take no action to deal with a risk, understanding and bearing the potential consequences if it occurs.
Avoidance involves changing the project plan or activities to eliminate the risk entirely, often by not undertaking the risky activity.
Concept tested: Risk management strategies-transfer
Source: https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-30r1.pdf
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