Question

In _____, the organization purchases insurance as a means to compensate for any loss.


a. Risk acceptance


b. Risk analysis


c. Risk mitigation


d. Risk management


e. Risk transference

Answer 1

Answer:

The correct answer is letter "E": Risk transference.

Explanation:

Risk transference is a risk management method in which the liability of a potential loss is transferred from one party to another with a contract in between where the coverage terms and limits are specified. A typical is a company buying an insurance policy. There the policyholder is transferring his liabilities to the insurance company.