PRINCE2F PRINCE2 Practices Practice Question
A risk has been identified that could cause a delay to the project. The project team decides to purchase insurance to cover the financial impact. Which risk response type is this?
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
Transferring the financial impact to a third party (insurance) is a 'transfer' response. 'Reduce' would involve actions to lower probability or impact. 'Accept' would be to take the risk without action.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Transfer
Why this is correct
Transfer shifts the financial impact of a risk to a third party. Purchasing insurance moves the potential cost of the delay to the insurer, so the risk response type is transfer, matching the scenario's insurance-based mitigation.
- ✗
Avoid
Why it's wrong here
Avoid eliminates the threat by removing its cause, such as re-sequencing work or dropping the deliverable entirely; buying insurance leaves the delay risk intact and merely funds the loss. Avoidance would be right if the team cancelled the activity that exposes them to the risk.
- ✗
Accept
Why it's wrong here
Accept acknowledges the risk and covers the consequences from the existing budget or contingency, with no proactive action taken. Purchasing an insurance policy is a deliberate, funded response that transfers the financial impact, so it is not passive acceptance.
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Reduce
Why it's wrong here
Reduce lowers the probability or impact through mitigation, for example adding redundant hardware or extra testing. Insurance changes neither likelihood nor size of the delay; it only compensates the financial loss, which is transfer, not reduction.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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