Which of the following best describes "risk transfer"?

Risk transfer refers to the process of shifting the financial burden associated with a risk to another party. This is commonly done through mechanisms such as insurance. By purchasing insurance, an organization effectively transfers the potential financial impact of certain risks (such as property damage, liability claims, or business interruption) to the insurance company. This means that while the organization still recognizes the risk exists, it is not solely responsible for the financial consequences, should those risks materialize.

Risk transfer is a critical component of risk management strategies, allowing organizations to protect themselves against specific financial losses by leveraging the risk management capabilities of a third party. This approach can enable organizations to focus their resources on strategic initiatives while minimizing the financial impact of unforeseen events for which they have transferred the risk.

In contrast, measures like implementing security controls or accepting risks do not involve transferring the risk to another entity, and mitigating risks through policy changes may reduce exposure but does not shift the risk away from the organization.