Quick Answer
The answer is transfer, as purchasing insurance is the classic example of a risk transfer strategy for the CAPM exam. This strategy works by shifting the financial impact of a risk to a third party, such as an insurance company, without eliminating the risk itself. In the context of the Certified Associate in Project Management exam, this question tests your ability to distinguish transfer from other risk responses, particularly mitigation, which reduces probability or impact rather than shifting ownership. A common trap is confusing transfer with mitigation because both involve proactive steps, but remember: if a third party takes on the financial consequence, it is transfer. For a high-impact, low-probability risk, insurance is a cost-effective way to handle the potential loss without altering the project plan. A useful memory tip is to think of “transfer” as “third-party coverage”—if you are paying someone else to cover the loss, you are transferring the risk.
This CAPM practice question tests your understanding of predictive plan-based methodologies. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. 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.
A project manager is planning risk responses for a high-impact, low-probability risk. The team decides to purchase an insurance policy to cover potential losses. Which risk response strategy is being used?
Avoidance
Why wrong: Avoidance would change the plan to eliminate the risk entirely, not transfer it.
Transfer
Insurance transfers the financial risk of a loss to the insurance company.
Acceptance
Why wrong: Acceptance would involve acknowledging the risk and budgeting for it, not transferring.
Mitigation
Why wrong: Mitigation would reduce the probability or impact, not transfer it.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Transfer
Option B is correct because risk transfer involves shifting the impact to a third party, like insurance. Option A is wrong because risk avoidance changes the plan to eliminate the risk. Option C is wrong because risk mitigation reduces probability or impact. Option D is wrong because risk acceptance acknowledges the risk without action.
Key principle: NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Avoidance
Why it's wrong here
Avoidance would change the plan to eliminate the risk entirely, not transfer it.
Transfer
Why this is correct
Insurance transfers the financial risk of a loss to the insurance company.
Related concept
Static NAT maps one inside address to one outside address.
Acceptance
Why it's wrong here
Acceptance would involve acknowledging the risk and budgeting for it, not transferring.
Mitigation
Why it's wrong here
Mitigation would reduce the probability or impact, not transfer it.
Common exam traps
NAT is not only about the public address. The inside/outside interface roles and the ACL or rule that matches traffic are just as important.
Detailed technical explanation
NAT questions usually test address translation, overload/PAT behaviour, static mappings and whether the right traffic is being translated. Read the interface direction and address terms carefully.
Key takeaway
NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Real-world example
A small business has 20 workstations on the 192.168.1.0/24 network and one public IP from its ISP. The router uses PAT (NAT overload) so all 20 devices share one public address using different source ports. NAT questions test whether you understand the four address terms and which direction each translation applies.
What to study next
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related CAPM NAT questions on configuration and troubleshooting.
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FAQ
Predictive Plan-Based Methodologies — This question tests Predictive Plan-Based Methodologies — Static NAT maps one inside address to one outside address..
The correct answer is: Transfer — Option B is correct because risk transfer involves shifting the impact to a third party, like insurance. Option A is wrong because risk avoidance changes the plan to eliminate the risk. Option C is wrong because risk mitigation reduces probability or impact. Option D is wrong because risk acceptance acknowledges the risk without action.
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related CAPM NAT questions on configuration and troubleshooting.
Static NAT maps one inside address to one outside address.
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Last reviewed: Jun 24, 2026
This CAPM practice question is part of Courseiva's free PMI 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 CAPM exam.
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