CAPM (Certified Associate in Project Management) Practice Exam

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What is the purpose of the 'transfer' strategy in risk management?

To eliminate the threat entirely
To shift all or some of the risk to a third party
To take no action as part of the planning process
To reduce probability and/or impact of an adverse risk event

The correct answer is: To shift all or some of the risk to a third party

The 'transfer' strategy in risk management involves shifting all or some of the risk to a third party. This is done to reduce the impact and/or probability of an adverse risk event, rather than eliminate the threat entirely (option A), or taking no action at all (option C). The 'transfer' strategy is typically used when the risk is too high for the organization to handle on its own, and requires the expertise and resources of a third party in order to minimize or manage the risk. This can include insurance, contracts, or outsourcing certain activities.