An organization is considering services it can successfully provide to its customers. One of the services, however, is deemed to be difficult to offer with a high degree of certainty of success. The o

Transference shifts the financial impact of a risk to a third party (such as insurance or a contractor), but the organization here is simply choosing not to engage, not transferring consequences.

Sharing involves distributing both the risk and potential reward with a partner (such as a joint venture), which requires engaging with the activity, not eliminating it.

Risk avoidance is the strategy of eliminating a risk by removing the cause entirely - in this case, by not offering the service at all. The organization assessed the likelihood of failure and determined the risk was unacceptable, so it chose to avoid the activity altogether rather than manage or absorb the risk. This is distinct from other responses because no part of the risk is retained, shared, or transferred.

Mitigation reduces the probability or impact of a risk while still proceeding with the activity, whereas the organization here has decided not to proceed at all.