Quick Answer
The answer is risk transfer. Outsourcing data center operations to a third party shifts the financial and operational burdens of infrastructure management—such as hardware maintenance, physical security, and uptime—to the vendor through contractual agreements like service-level agreements with penalty clauses, while the organization retains ownership of the data and ultimate business accountability. On the CRISC exam, this scenario tests your ability to distinguish risk transfer from other responses like mitigation or acceptance; a common trap is confusing transfer with mitigation, since outsourcing still requires oversight and does not eliminate the risk entirely. Remember that transfer always involves a third party assuming liability via contract, whereas mitigation involves internal controls to reduce impact or likelihood. A useful memory tip is “transfer the check, not the deck”—you shift financial liability, not the core accountability for the data.
This CRISC practice question tests your understanding of risk response and mitigation. 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 decides to outsource its data center operations to a third party. This is an example of which risk response?
Risk reduction
Why wrong: Reduction would involve internal controls, not outsourcing.
Risk transfer
Outsourcing transfers operational risk to the third party.
Risk acceptance
Why wrong: Acceptance would mean no action is taken.
Risk avoidance
Why wrong: The organization is not avoiding the risk; it is still using the data center.
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 transfer
Outsourcing data center operations transfers the financial and operational risks associated with managing the infrastructure to a third-party provider. This is a classic risk transfer response because the organization retains ownership of the data and business accountability but shifts the liability for physical security, hardware maintenance, and uptime to the vendor via contractual agreements, such as SLAs with penalty clauses.
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 reduction
Why it's wrong here
Reduction would involve internal controls, not outsourcing.
Risk transfer
Why this is correct
Outsourcing transfers operational risk to the third party.
Related concept
Read the scenario before looking for a memorised answer.
Risk acceptance
Why it's wrong here
Acceptance would mean no action is taken.
Risk avoidance
Why it's wrong here
The organization is not avoiding the risk; it is still using the data center.
Common exam traps
The trap here is that candidates confuse risk transfer with risk reduction, mistakenly thinking that outsourcing reduces the risk of hardware failure, when in fact it only shifts the financial liability for that failure, not the operational impact on the business.
Detailed technical explanation
Risk transfer in IT outsourcing typically involves contractual risk allocation through service level agreements (SLAs) that specify uptime guarantees, incident response times, and financial penalties for breaches. Under the hood, the organization still retains residual risks, such as vendor lock-in or data exfiltration by the provider, which cannot be fully transferred. In real-world scenarios, this is common with colocation providers or managed hosting services where the customer owns the hardware but the provider handles power, cooling, and physical access controls.
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 CRISC 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
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Risk Response and Mitigation — study guide chapter
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FAQ
Risk Response and Mitigation — This question tests Risk Response and Mitigation — Read the scenario before looking for a memorised answer..
The correct answer is: Risk transfer — Outsourcing data center operations transfers the financial and operational risks associated with managing the infrastructure to a third-party provider. This is a classic risk transfer response because the organization retains ownership of the data and business accountability but shifts the liability for physical security, hardware maintenance, and uptime to the vendor via contractual agreements, such as SLAs with penalty clauses.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
Same concept, more angles
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. Refer to the exhibit. Based on the risk register, which risk response is applied to the risk with the highest inherent risk?
mediumWhy A: Option B is correct because Risk-001 has inherent High and its response is Transfer. Options A, C, and D are incorrect.
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Last reviewed: Jun 11, 2026
This CRISC 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 CRISC exam.
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