After consulting with the Chief Risk Officer (CRO), a manager decides to acquire cybersecurity insurance for the company.
Which of the following risk management strategies is the manager adopting?
A.
Risk acceptance B.
Risk avoidance C.
Risk transference D.
Risk mitigation.
C.
After consulting with the Chief Risk Officer (CRO), a manager decides to acquire cybersecurity insurance for the company.
Which of the following risk management strategies is the manager adopting?
A.
Risk acceptance
B.
Risk avoidance
C.
Risk transference
D.
Risk mitigation.
C.
The manager is adopting the risk management strategy of risk transference by acquiring cybersecurity insurance for the company after consulting with the Chief Risk Officer (CRO).
Risk management is the process of identifying, assessing, and controlling risks to minimize the negative impact they can have on an organization's operations and objectives. There are four main risk management strategies that an organization can adopt:
A. Risk acceptance: This strategy involves accepting the risk and not taking any further action to mitigate it. Organizations may choose to accept risks when the cost of mitigating the risk is too high or when the risk is deemed to be acceptable.
B. Risk avoidance: This strategy involves avoiding the risk altogether. Organizations may choose to avoid risks by not engaging in certain activities or by implementing controls that eliminate the risk.
C. Risk transference: This strategy involves transferring the risk to another party. Organizations can transfer risk through insurance, contracts, or outsourcing.
D. Risk mitigation: This strategy involves taking steps to reduce the likelihood or impact of a risk. Organizations can mitigate risks by implementing controls, policies, or procedures.
In this scenario, the manager has decided to acquire cybersecurity insurance for the company. By doing so, the manager is transferring the risk of a cybersecurity breach to the insurance provider. If a breach occurs, the insurance provider will cover some or all of the costs associated with the breach, such as the cost of forensic investigation, legal fees, and customer notification. This is an example of risk transference as a risk management strategy.