Answer (A) is correct . Risk retention is the acceptance of the risk of an activity by the organization. This term is becoming synonymous with the phrase “self insurance.”
Answer (B) is incorrect because Risk sharing is the offloading of some loss potential to another party. Common examples are the purchase of insurance policies, engaging in hedging operations, and entering into joint ventures. It is synonymous with risk transfer.
Answer (C) is incorrect because Risk transfer, synonymous with risk sharing, is the offloading of some loss potential to another party. Common examples are the purchase of insurance policies, engaging in hedging operations, and entering into joint ventures.
Answer (D) is incorrect because Risk reduction (mitigation) is the act of lowering the level of risk associated with an activity. For instance, the risk of systems penetration can be reduced by maintaining a robust information security function within the organization.
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