ISC2 CC Security Principles Practice Question
A security manager is reviewing the organization's approach to risk. The manager decides to purchase cyber insurance to transfer some of the financial risk associated with a data breach. Which risk management strategy is being used?
⚠ Common exam trap
A common mix-up: candidates confuse risk transference with mitigation because insurance is a control, but it does not reduce the likelihood or impact of the breach itself, only the financial aftermath.
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
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Risk transference
Risk transference involves shifting the financial impact of a risk to another party, often through insurance or contracts. Cyber insurance is a common method of transferring the financial consequences of a data breach. The organization still owns the risk of the breach occurring, but the financial loss is partially borne by the insurer. This strategy is distinct from avoidance, mitigation, and acceptance.
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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Risk acceptance
Why it's wrong here
Risk acceptance means acknowledging the risk and deciding to bear it without taking action to transfer or mitigate it. Purchasing insurance is an action that transfers risk, so it is not acceptance. The organization is actively managing the risk, not just accepting it.
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Risk avoidance
Why it's wrong here
Risk avoidance involves eliminating the activity that introduces the risk entirely. Purchasing insurance does not avoid the risk; it transfers the financial impact. The organization still engages in activities that could lead to a breach. Therefore, this is not avoidance.
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Risk transference
Why this is correct
Risk transference shifts the financial impact of a risk to a third party, such as an insurance company. By purchasing cyber insurance, the organization transfers some of the financial risk of a data breach to the insurer. This is a classic example of risk transference.
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Risk mitigation
Why it's wrong here
Risk mitigation reduces the likelihood or impact of a risk through controls. Insurance does not reduce the likelihood or impact of a breach; it compensates for financial loss after the fact. Mitigation would involve implementing security measures, not transferring financial risk.
Go deeper
Related to this question
Learn chapter
Incident Response and Management
Key term
Risk
Risk is the possibility that an event or action will negatively affect an organization's ability to achieve its goals, often measured in terms of likelihood and impact.
Key term
Impact
Impact is the measure of the potential damage or harm that a risk event could cause to an organization's assets, operations, or reputation.
About these practice questions
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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 ISC2 exam blueprint
This CC practice question is part of Courseiva's free ISC2 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 CC exam.