Which risk response involves shifting the consequence of the risk to a third party such as using SaaS?

Which risk response involves shifting the consequence of the risk to a third party such as using SaaS?

• A. Avoidance
• B. Acceptance
• C. Transference
• D. Mitigation

Answer: (C)

Transference is about shifting the impact of a risk to another party. In IT risk management, you move the responsibility for handling certain risk events to a third party by outsourcing or using a service provider, such as Software as a Service. By doing this, the vendor becomes responsible for many of the controls, reliability, and performance aspects covered by the contract, and the organization reduces its direct exposure to the consequence of those risks. You still need governance and oversight—ensuring the contract, SLAs, and security obligations align with your needs—but the risk’s immediate impact is borne by the vendor through the arrangement.

Avoidance would mean not engaging in the activity to prevent the risk altogether. Acceptance means you acknowledge the risk and take no specific action beyond monitoring. Mitigation involves taking steps to reduce the likelihood or impact yourself, rather than shifting the risk to another party.

In summary, moving to a SaaS model is a classic example of transferring risk to a third party.