You are the project manager of a large construction project. Part of the project involves the wiring of the electricity in the building your project is creating. You and the project team determine…

Acceptance means acknowledging the risk and deciding to deal with consequences if it occurs, rather than transferring responsibility to another party.

Mitigation reduces the probability or impact of a risk but does not shift ownership or liability to a third party.

Risk transference shifts the financial impact and ownership of a risk to a third party without eliminating the risk itself. By hiring an electrician, the project transfers the danger and liability of the electrical work to the contractor, who assumes responsibility for managing that risk. This is a classic example of transference through outsourcing or contracting.

Avoidance eliminates the risk entirely by changing the project plan, not by assigning the work and its associated risk to an outside contractor.