hardMultiple Choice
PK0-005 Practice Question: A project manager is leading a construction…
A project manager is leading a construction project. The team identifies a risk that a key supplier may go bankrupt. The project manager decides to purchase insurance to cover potential losses. Which risk response strategy is being used?
⚠ Common exam trap
CompTIA often tests the distinction between Mitigate and Transfer, where candidates mistakenly choose Mitigate because insurance seems to 'reduce' impact, but the key is that Transfer shifts the financial burden to another party, while Mitigate involves internal actions to lower probability or impact.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Transfer
Purchasing insurance transfers the financial risk of the supplier's bankruptcy to the insurance company. This is a classic example of the Transfer risk response strategy, where the impact of the risk is shifted to a third party, not eliminated or reduced.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
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Accept
Why it's wrong here
Accepting acknowledges the risk and makes no proactive provision, so purchasing insurance contradicts it. It is tempting because acceptance is valid for low-impact risks where the cost of any response outweighs the exposure, and teams often document a contingency reserve instead of transferring the loss.
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Avoid
Why it's wrong here
Avoidance eliminates the threat by removing its cause, such as changing suppliers or scope, whereas buying insurance retains the risk and transfers the financial loss. It is tempting because avoidance removes exposure entirely, which suits risks whose impact is intolerable and no mitigation is feasible.
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Mitigate
Why it's wrong here
Mitigation reduces probability or impact, not transfer.
- ✓
Transfer
Why this is correct
Purchasing insurance shifts the financial impact of the supplier bankruptcy risk to a third party, the insurer, for a premium. That reallocation of liability to an external party is transfer, distinct from avoid, mitigate or accept, which retain the risk internally.
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About these practice questions
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This PK0-005 practice question is part of Courseiva's free CompTIA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PK0-005 exam.