Cisco Certified Support Technician (CCST) CybersecurityRisk ManagementMedium
A small business is considering implementing a new customer relationship management (CRM) system. During the risk assessment, it's determined that a data breach could lead to significant financial losses and reputational damage. The business decides to purchase a cyber insurance policy to cover potential financial impacts from such a breach. Which risk mitigation strategy is being employed here?
- ARisk Acceptance
- BRisk Avoidance
- CRisk Transfer
- DRisk Reduction
Show answer & explanationAnswer & explanation
Correct answer: C. Risk Transfer
Purchasing a cyber insurance policy shifts the financial burden of a data breach from the business to the insurance provider. This action is a classic example of risk transfer.
Why the other options are wrong
- A. Risk acceptance would mean doing nothing and bearing the full consequences.
- B. Risk avoidance would mean not implementing the CRM system at all to avoid the risk.
- D. Risk reduction (or mitigation) involves implementing controls to decrease the likelihood or impact of the breach itself, not just its financial aftermath.
Risk Transfer
A risk response strategy that involves shifting the potential impact of a risk to a third party, often through insurance or outsourcing.
- Does not eliminate the risk, but changes who bears the cost.
- Commonly achieved through insurance policies.
- Can also involve contractual agreements with suppliers.
Memory trick: Accept, Transfer, Avoid, Reduce: The A.T.A.R. of risk.