After an initial risk assessment, the project manager realizes it is very likely that the controls will not be implemented within 30 days, and the costs of implementing the controls could be…

The correct answer is A. Transfer the risk. Risk transfer involves shifting the financial or operational impact of a risk to a third party - for example, through insurance, indemnification clauses, or outsourcing the function that carries the risk. Here, the original controls are unworkable (too slow and too expensive)…

Project management concepts

Question

After an initial risk assessment, the project manager realizes it is very likely that the controls will not be implemented within 30 days, and the costs of implementing the controls could be significant. As a result, different controls will be utilized. Which of the following risk responses BEST describes this situation?

Options

ATransfer the risk
BAvoid the risk
CAccept the risk
DExploit the risk

How the community answered

(21 responses)

A
86% (18)
B
5% (1)
C
10% (2)

Explanation

Risk transfer involves shifting the financial or operational impact of a risk to a third party - for example, through insurance, indemnification clauses, or outsourcing the function that carries the risk. Here, the original controls are unworkable (too slow and too expensive), so 'different controls' - implying a third-party mechanism - are used instead. This shifts the burden of managing that risk to another entity. Risk avoidance (B) would mean eliminating the activity causing the risk entirely. Risk acceptance (C) means acknowledging the risk and taking no preemptive action. Risk exploitation (D) is a positive-risk response for opportunities. Transfer best fits the scenario of substituting costly in-house controls with an external mechanism.

Topics

#risk response#risk transfer#risk management#risk assessment

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