CAF-7 · Chapter 10 · Question 8 of 15
A company is highly concerned about the threat of a devastating cyber-attack on its servers. To manage this risk, it purchases a comprehensive cybersecurity insurance policy. Which risk management strategy does this represent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Risk Transfer (Sharing)
Explanation
Purchasing insurance is the classic example of Risk Transfer. The company pays a premium to transfer the financial burden of the risk to a third party (the insurance company).
More Financial Risk Management MCQs
- Q10A corporate treasurer expects to borrow Rs. 50 million in six months' time for a period of three months. To protect against a potential…
- Q11A business discovers that launching a controversial new product could potentially result in massive lawsuits that would bankrupt the firm…
- Q12In a structured organizational risk management framework, who holds the ultimate responsibility for setting the overall 'risk appetite'…
- Q13What does the financial acronym 'KIBOR' stand for?
- Q14If a company purchases a Call option on an interest rate (an Interest Rate Cap), what protection does the company secure?