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In the graphic that follows, which method is missing and what is the purpose of this method?

There are four ways of dealing with risk. In the graphic that follows, which method is missing and what is the purpose of this method?

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A.
Risk transference. Share the risk with other entities.

B.
Risk reduction. Reduce the risk to an acceptable level.

C.
Risk rejection. Accept the current risk.

D.
Risk assignment. Assign risk to a specific owner.

Explanation:
A: Once a company knows the amount of total and residual risk it is faced with, it must decide how to handle it. Risk can be dealt with in four basic ways: transfer it, avoid it,
reduce it, or accept it. Many types of insurance are available to companies to protect their assets. If a company decides the total or residual risk is too high to gamble with, it can
purchase insurance, which would transfer the risk to the insurance company.
B is incorrect because another approach is risk mitigation, where the risk is reduced to a level considered acceptable enough to continue conducting business. The
implementation of firewalls, training, and intrusion/detection protection systems represent types of risk mitigation. Risk reduction is the same as risk mitigation, which is already
listed in the graphic.
C is incorrect because companies should never reject risk, which basically means that they refuse to deal with it. Risk commonly has a negative business impact and if not
dealt with properly the company could have to deal with things such as the loss of production resources, legal liability issues, or a negative effect on its reputation. It is important
that identified risk be dealt with properly through transferring it, avoiding it, reducing it, or accepting it.
D is incorrect because while someone could be delegated to deal with a specific risk, this is not one of the methods that is used to deal with risk. Even if risk was assigned to a
specific entity to deal with it, she would still need to either transfer, avoid, reduce, or accept the risk.


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