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.
Exploit

C.
Avoidance

D.
Mitigation

Explanation:

When you are hiring a third party to own risk, it is known as transference risk response. 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 D is incorrect. The act of spending money to reduce a risk probability and impact is known as mitigation.
Answer option B 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 option C is incorrect. When extra activities are introduced into the project to avoid the risk, this is an example of avoidance.
Reference: "A Guide to the Project Management Body of Knowledge, (PMBOK Guide)"