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 the electrical work is too dangerous to perform yourself so you hire an electrician to perform the work for the project. This is an example of what type of risk response?

A.
Avoidance

B.
Transference

C.
Mitigation

D.
Acceptance

Explanation:

Whenever the risk is transferred to someone else it is an example of the transference risk response. Transference usually has a fee attached to the service provider that will own the risk event.
What is transference?
Transference is a strategy to mitigate negative risks or threats. In this strategy, consequences and the ownership of a risk is transferred to a third party. This strategy does not eliminate the risk but transfers responsibility of managing the risk to another party. Insurance is an example of transference. Answer option C is incorrect as mitigation are activities to reduce the probability and/or impact of a risk event.
Answer option D is incorrect as acceptance is when the risk event is accepted and allowed to happen. This response is typical for smaller risk events.
Answer option A is incorrect as avoidance are actions to avoid the risk event. This example is not avoidance because the danger of electricity does not go away as the electrician now owns the risk event. Reference: Chapter 11. A Guide to the Project Management Body of Knowledge, (PMBOK Guide), Fourth Edition, ISBN.9781933890517, Section 11.5.2.1.