The risk transference is referred to the transfer of risks to a third party, usually for a fee, it creates a contractual-relationship for the third party to manage the risk on behalf of the performing organization. Which one of the following is NOT an example of the transference risk response?
A.
Use of insurance
B.
Life cycle costing
C.
Performance bonds
D.
Warranties
Explanation:
Life cycle costing describes the cost of ownership for a project’s product. It is not a risk response, but informs the stakeholders that what it will cost to support the deliverable of the project. 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 options A, C, and D are incorrect. These are an example of the risk response transference. Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"