This scenario is demonstrating which of the following form?

You are working on a project in an enterprise. Some part of your project requires e-commerce, but your enterprise choose not to engage in e-commerce.

This scenario is demonstrating which of the following form?
A . risk avoidance
B . risk treatment
C . risk acceptance
D . risk transfer

View Answer

Answer: A

Explanation:

Each business process involves inherent risk. Not engaging in any activity avoids the inherent risk associated with the activity. Hence this demonstrates risk avoidance.

Incorrect Answers:

B: Risk treatment means that action is taken to reduce the frequency and impact of a risk.

C: Acceptance means that no action is taken relative to a particular risk, and loss is accepted when/if it occurs. This is different from being ignorant of risk; accepting risk assumes that the risk is known, i.e., an informed decision has been made by management to accept it as such.

D: Risk transfer/sharing means reducing either risk frequency or impact by transferring or otherwise sharing a portion of the risk. Common techniques include insurance and outsourcing. These techniques do not relieve an enterprise of a risk, but can involve the skills of another party in managing the risk and reducing the financial consequence if an adverse event occurs.