Question 130 of 487
CAPM Predictive Plan-Based Methodologies Practice Question
A project manager is creating a risk response plan for a predictive construction project. One risk has a high probability and high impact. The team decides to purchase insurance to cover potential losses. Which risk response strategy is being used?
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
Purchasing insurance transfers the financial impact of the risk to a third party (the insurer), which is the definition of the transfer strategy. Option A (Avoid) is incorrect because avoidance eliminates the risk entirely, e.g., by not performing the activity; insurance does not eliminate the risk. Option B (Accept) is incorrect because acceptance means acknowledging the risk and taking no proactive action, often setting aside a contingency reserve; purchasing insurance is an active response. Option C (Mitigate) is incorrect because mitigation reduces the probability or impact of the risk; insurance does not reduce the likelihood or severity of the loss, it only shifts the financial burden.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Avoid
Why it's wrong here
Avoidance would mean not doing the activity that causes the risk.
- ✗
Accept
Why it's wrong here
Acceptance means acknowledging the risk and not taking proactive action.
- ✗
Mitigate
Why it's wrong here
Mitigation involves reducing probability or impact, not transferring.
- ✓
Transfer
Why this is correct
Insurance transfers the financial risk to the insurance company.
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Last reviewed: Jun 24, 2026
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