Managing Project Risks
Question
The project team is not comfortable moving an expensive material.
A third party is hired to move the material.
This is an example of risk:
Answers
Explanations
Click on the arrows to vote for the correct answer
A. B. C. D.A.
The correct answer is A. Transference.
Risk transference is a risk response strategy in which the project team transfers the risk to a third party. In this case, the project team is not comfortable moving the expensive material, so they hire a third party to move it. By doing this, they are transferring the risk to the third party. If something goes wrong during the move, the third party will be responsible for any damage or loss of the material.
Risk sharing is another risk response strategy where the project team shares the risk with another party. However, in this case, the project team is not sharing the risk but transferring it entirely to the third party.
Risk avoidance is a risk response strategy in which the project team avoids the risk altogether. In this case, the project team could have decided not to move the expensive material at all, but that would have affected the project's objectives.
Risk acceptance is a risk response strategy in which the project team accepts the risk and its potential consequences. In this case, the project team is not accepting the risk but transferring it to the third party.
Therefore, the correct answer is A. Transference, as the project team is transferring the risk to the third party by hiring them to move the expensive material.
