What does 'Transfer the Risk' mean?

• A. The risk may be reduced by transferring all or some portion of a particular task or mission. Transferring risk to another individual, unit, or platform that is better positioned to face it decreases the probability or severity of the risk.
• B. It means ignoring risk and hoping it goes away.
• C. It implies only purchasing insurance.
• D. It means reallocating budget without regard to risk.

Answer: (B)

Transferring risk means shifting the potential loss or liability to another party that is better positioned to manage it. You don’t eliminate the risk, you move its consequences away from your unit. For example, you might contract a task to a vendor with stronger controls or buy insurance so the insurer bears financial responsibility for certain losses. This approach reduces your unit’s residual risk by lowering either the chance of the event happening with a faced risk, or the impact if it does occur. The description that best fits this concept is transferring risk to someone who can handle it, thereby decreasing its likelihood or severity. Ignoring risk, relying only on insurance, or reallocating budget without considering risk do not truly move the risk to a party equipped to manage it.