A company purchased cyber insurance to address items listed on the risk register. Which of the following strategies does this represent?

Rationale

Purchasing cyber insurance represents a transfer strategy.

By acquiring cyber insurance, the company effectively transfers the financial risk associated with potential cyber incidents to the insurance provider. This strategy allows the organization to mitigate the financial impact of risks listed in the risk register without eliminating the risks themselves.

A (Accept) YOUR ANSWER

Accepting a risk involves acknowledging its existence and deciding to proceed without taking any action to mitigate or transfer it. This strategy would mean the company is willing to bear the cost of potential cyber incidents, which is not the case when it invests in insurance.

B (Transfer) CORRECT

The transfer strategy accurately describes the action taken by the company when it purchases cyber insurance. By doing so, it shifts the financial burden of potential cyber risks to the insurance provider, allowing the company to manage its risk exposure more effectively.

C (Mitigate) YOUR ANSWER

Mitigation involves implementing measures to reduce the likelihood or impact of a risk. While the company may engage in mitigation activities alongside purchasing insurance, the act of buying insurance itself does not reduce the risk; rather, it transfers the responsibility for potential losses.

D (Avoid) YOUR ANSWER

Avoiding a risk means taking steps to eliminate its potential impact entirely, such as not engaging in activities that could lead to cyber incidents. Purchasing insurance does not eliminate the risk but rather acknowledges its existence and seeks to manage it through transfer.

Conclusion

In summary, purchasing cyber insurance is a classic example of risk transfer, where the financial implications of potential cyber threats are shifted to the insurer. This strategy allows companies to address risks listed in their risk register while maintaining their operational activities without the direct financial burden of those risks. Understanding these strategies is crucial for effective risk management in any organization.

A company purchased cyber insurance to address items listed on the risk register. Which of the following strategies does this represent?

Purchasing cyber insurance represents a transfer strategy.

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