US CMA Part 2 · Chapter 7 · Question 4 of 15
A company purchases a commercial liability insurance policy to cover potential customer injury claims. Which risk response does this represent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Sharing (transferring) the risk
Explanation
Buying insurance shares or transfers the financial consequences of a risk to another party in exchange for a premium. Avoidance means exiting the activity that gives rise to the risk, acceptance means taking no action beyond monitoring, and reduction means using controls to lower likelihood or impact.
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