Which type of risk response is this?

A part of a project deals with the hardware work. As a project manager, you have decided to hire a
company to deal with all hardware work on the project. Which type of risk response is this?

A.
Transference

B.
Mitigation

C.
Avoidance

D.
Exploit

Explanation:

When you are hiring a third party to own risk, it is known as transference risk response.
Risk transfer means that impact of risk is reduced by transferring or otherwise sharing a portion of
the risk with an external organization or another internal entity. Transfer of risk can occur in many
forms but is most effective when dealing with financial risks. Insurance is one form
of risk transfer.
Answer B is incorrect. The act of spending money to reduce a risk probability and impact is known
as mitigation.

Answer D is incorrect. Exploit is a strategy that may be selected for risks with positive impacts
where the organization wishes to ensure that the opportunity is realized.
Answer C is incorrect. When extra activities are introduced into the project to avoid the risk, this is
an example of avoidance.