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 D. Transfer. Risk Transfer (or Transference) is the correct answer. Insurance is one of the most common forms of risk transference. When you purchase insurance, you are transferring the financial consequences of a risk event to the insurance company (a third party). In exchange for a…

Risk Strategy and Planning

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?

Options

AMitigate
BAvoid
CAccept
DTransfer

How the community answered

(28 responses)

A
7% (2)
B
4% (1)
C
14% (4)
D
75% (21)

Explanation

Risk Transfer (or Transference) is the correct answer. Insurance is one of the most common forms of risk transference. When you purchase insurance, you are transferring the financial consequences of a risk event to the insurance company (a third party). In exchange for a premium, the insurer assumes responsibility for compensating losses if the risk materializes. This does not eliminate the risk itself but shifts the financial burden to another party. Mitigation (A) would involve reducing the likelihood or impact of the risk. Avoidance (B) would require changing the project plan to eliminate the risk entirely. Acceptance (C) means acknowledging the risk and either setting aside a contingency reserve or simply accepting the consequences if it occurs - without shifting responsibility to a third party.

Topics

#Risk response strategies#Risk transfer#Threats#Insurance

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