Exam SY0-601 topic 1 question 116 discussion

Correct answer A here

Answer: Purchasing Insurance Cyber insurance covers a business' liability for a data breach involving sensitive customer information like health records, credit card numbers, account numbers etc. A few things insurance generally handle are legal fees, notifying customers of the data breach, and repairing damaged systems. Risk transference is about assigning risk to a third-party. The risk here being the financial loss that can be incurred after a data breach from legal fees, repairing system etc. The organization is assigning this risk to an insurance company.

A. Purchasing insurance By obtaining insurance, an organization transfers the financial risk associated with certain events to the insurance provider. B. Patching vulnerable servers: This is an example of risk mitigation. The organization is taking actions to reduce the likelihood and impact of a security risk. C. Retiring outdated applications: This is an example of risk avoidance. By retiring outdated applications, the organization eliminates the associated risks rather than transferring them to another party. D. Application owner risk sign-off: This is an example of risk acceptance. When an application owner signs off on risks, they are acknowledging and accepting the risks associated with the application rather than transferring them to another party.

Transference of risk involves shifting the financial consequences of a risk to another party, typically through the use of insurance or outsourcing. By purchasing insurance, an organization transfers the financial risk of potential incidents to the insurance provider, who will cover the costs associated with those incidents up to the limits specified in the insurance policy.

Transference of risk involves shifting the potential impact of a risk to another party or entity. In the context of risk management, purchasing insurance is a common example of risk transference. By purchasing insurance, an organization transfers the financial burden of potential losses or damages to the insurance company. In case of an adverse event covered by the insurance policy, the insurance company will bear the cost of the loss, reducing the financial impact on the organization.

Transference because you are moving the risk to the insurance company.

can someone explain why the correct answer is A??