ITPEC FE Morning April 2021 Question 35

Risk Treatment Categories — identify risk avoidance among four treatment types.

Four risk treatment strategies:

• •Risk avoidance — discontinuing operations that carry the risk
• •Risk reduction — applying controls to lower the risk
• •Risk acceptance — knowingly choosing not to act on a risk
• •Risk sharing (transfer) — transferring the risk to other parties (e.g. insurance, outsourcing)

Answer: (b) — stopping risky operations entirely is avoidance.

Why not others:
- (a) — applying controls to lower risk = risk reduction
- (c) — knowingly not acting = risk acceptance
- (d) — transferring risk to others = risk sharing/transfer

Key rule: Avoidance eliminates the risk source entirely by ceasing the activity.

AI-generated — may contain errors