CISM Information Security Risk Management Practice Question
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?
⚠ Common exam trap
CISM often tests the distinction between accepting a risk because it is cost-justified versus avoiding or transferring it, and candidates frequently default to 'mitigate' or 'transfer' without weighing the stated cost-versus-loss economics.
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
✓
Risk acceptance
Risk acceptance is the appropriate treatment when the cost of mitigating a risk exceeds the potential loss it represents. In this scenario, since mitigation costs more than the expected loss, accepting the risk is the most economically justified and effective strategy. The organization consciously retains the risk and monitors it, rather than spending more to prevent it than the loss would cost.
Answer analysis
Option-by-option breakdown
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
Avoidance eliminates the process entirely, which is impractical for a critical business process that must continue operating. It is tempting because avoidance removes the risk outright, and it would be correct for an activity whose loss is tolerable or which can be discontinued without disrupting essential operations.
- ✗
Risk reduction
Why it's wrong here
Reduction applies controls to lower likelihood or impact, but the stem states mitigation costs exceed the potential loss, so the expenditure is unjustified. It is tempting because reduction is the default treatment for high inherent risk, and it would be correct where control cost is proportionate to the loss being prevented.
- ✓
Risk acceptance
Why this is correct
Risk acceptance is appropriate because the mitigation cost exceeds the potential loss, making further controls economically unjustifiable. The organization formally acknowledges the residual risk and retains it, satisfying the stem's cost-benefit constraint. Senior management must approve this decision, and the risk should be monitored and reviewed periodically in case the inherent risk profile changes.
- ✗
Risk transfer
Why it's wrong here
Transferring risk via insurance or contracts leaves the loss exposure with the organization when the loss is not fully indemnified, and the stem asks for treatment of a high inherent risk where mitigation cost exceeds potential loss. Transfer suits low-frequency, high-severity losses that are insurable.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official ISACA exam blueprint
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.