CRISC Certified in Risk and Information Systems ControlRisk Response and ReportingEasy
A financial institution is reviewing its risk response strategies for potential cyberattacks. They have implemented advanced intrusion detection systems, firewalls, and regular employee training. However, the residual risk of a successful, sophisticated attack remains. The risk practitioner recommends purchasing a cyber insurance policy to cover potential financial losses from such an event. Which of the following risk response strategies is being employed by purchasing the insurance policy?
- ARisk Transfer
- BRisk Avoidance
- CRisk Mitigation
- DRisk Acceptance
Show answer & explanationAnswer & explanation
Correct answer: A. Risk Transfer
Purchasing a cyber insurance policy shifts the financial impact of a risk to a third party (the insurer), which is the definition of risk transfer. The institution is not eliminating the risk but is protecting itself financially.
Why the other options are wrong
- B. Risk avoidance involves eliminating the activity that gives rise to the risk, which is not feasible for cyberattacks in a financial institution.
- C. Risk mitigation involves reducing the likelihood or impact of a risk, which the institution has already done with IDS, firewalls, and training.
- D. Risk acceptance is acknowledging the risk and taking no further action, which is not the case here as they are buying insurance.
Risk Transfer
A risk response strategy that involves shifting the financial consequences or responsibility of a risk to a third party, often through insurance, outsourcing, or contractual agreements.
- Does not eliminate the risk, but shifts its financial impact.
- Commonly achieved through insurance policies.
- Can involve outsourcing risky activities to specialized providers.
Memory trick: Always Transfer Risk to Secure Financial Assets.