Exam SY0-601 topic 1 question 112 discussion

organization's liability -> organization's RESPONSABILITY

Thankfully, nobody thinks the answer is anything other than option A.

Transference. The organization transfers the risk to another entity or at least shares the risk with another entity. The most common method is by purchasing insurance. Another method is by outsourcing or contracting a third party.

Transference is a risk management practice in which an organization shifts the financial burden of potential risks or losses to another party. In this scenario, by contracting with an insurance firm, the company is transferring the liability of certain risks to the insurance company. If an incident occurs that is covered by the insurance policy, the insurance company would bear the financial responsibility, thereby limiting the organization's liability.

Contracting with an insurance firm to limit the organization's liability is an example of risk transference. In this practice, the company transfers the financial consequences of certain risks to an insurance provider. In case of a covered event, the insurance firm would bear the financial burden, reducing the potential impact on the company's assets and resources.

A. Insurance is transferring the risk to the insurance company

Insurance = Tranfert

The board of directors at a company contracted with an insurance firm to limit the organization's liability BEST describes the risk management practice of transference. Transference is the process of transferring the risk of loss from one party to another, typically through the use of insurance. In this case, the company is transferring the risk of potential liability to the insurance firm by purchasing an insurance policy. This allows the company to limit its potential losses in the event of a liability claim. Options B, C, and D do not accurately describe the situation described in the question.

if something happens, the insurance company will assume responsibility (Transference)