Quick Answer
The answer is risk acceptance, because when the cost to mitigate exceeds the potential loss, it is the most cost-effective and strategically sound risk treatment strategy. This decision is grounded in the principle of cost-benefit analysis, where spending more on controls than the value of the asset or the projected loss would be wasteful, making acceptance the logical choice for the residual risk. On the Certified Information Security Manager CISM exam, this scenario tests your understanding of risk treatment options and the business case for accepting risk, often appearing as a trap where candidates mistakenly choose risk reduction or transfer without considering economic feasibility. A key memory tip is to think of the “cost-benefit threshold”—if mitigation costs more than the loss, accept the risk and document the rationale.
This CISM practice question tests your understanding of information security risk management. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
An organization is determining the risk treatment for a critical business process that has a high inherent risk. Which of the following is the MOST effective risk treatment strategy when the cost to mitigate exceeds the potential loss?
Risk avoidance
Why wrong: Avoiding the risk entirely may not be practical for a critical business process.
Risk reduction
Why wrong: Reducing risk would require controls that are not cost-justified.
Risk acceptance
Accepting the risk is justified when mitigation costs outweigh potential loss.
Risk transfer
Why wrong: Transferring risk via insurance may still have premiums that are not cost-effective.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Risk acceptance
Option B is correct because risk acceptance is appropriate when the cost of mitigation exceeds the potential loss. Option A is wrong because risk avoidance would mean discontinuing the process, which may not be feasible. Option C is wrong because risk transfer (e.g., insurance) might still be costly. Option D is wrong because risk reduction would require controls that are not cost-effective.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Risk avoidance
Why it's wrong here
Avoiding the risk entirely may not be practical for a critical business process.
Risk reduction
Why it's wrong here
Reducing risk would require controls that are not cost-justified.
Risk acceptance
Why this is correct
Accepting the risk is justified when mitigation costs outweigh potential loss.
Related concept
Read the scenario before looking for a memorised answer.
Risk transfer
Why it's wrong here
Transferring risk via insurance may still have premiums that are not cost-effective.
Common exam traps
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A practitioner preparing for the CISM exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
What to study next
Identify which CISM exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
Information Security Risk Management — study guide chapter
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FAQ
Information Security Risk Management — This question tests Information Security Risk Management — Read the scenario before looking for a memorised answer..
The correct answer is: Risk acceptance — Option B is correct because risk acceptance is appropriate when the cost of mitigation exceeds the potential loss. Option A is wrong because risk avoidance would mean discontinuing the process, which may not be feasible. Option C is wrong because risk transfer (e.g., insurance) might still be costly. Option D is wrong because risk reduction would require controls that are not cost-effective.
Identify which CISM exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 24, 2026
This CISM practice question is part of Courseiva's free ISACA 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 CISM exam.
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