Which of these is NOT a response to risk?
a. Mitigation
b. Transference
c. Resistance
d. Avoidance
The Correct Answer and Explanation is:
The correct answer is: c. Resistance
Explanation:
In risk management, organizations and individuals use various strategies to address potential risks to their objectives. The main recognized responses to risk include mitigation, transference, avoidance, and acceptance. Let’s break each one down and examine why resistance is not considered a standard response.
1. Mitigation:
Risk mitigation involves reducing the likelihood or impact of a risk. For example, a company might install fire suppression systems to reduce the damage caused by a fire. It does not eliminate the risk but controls it to acceptable levels.
2. Transference:
This strategy shifts the impact of a risk to a third party, typically through insurance or outsourcing. For example, purchasing liability insurance transfers financial consequences to the insurance company in case of a lawsuit.
3. Avoidance:
Avoidance means completely eliminating the risk by choosing not to engage in a high-risk activity. For instance, a business may decide not to launch a product in a politically unstable region to avoid market risks.
4. Acceptance (not listed in the question but commonly included):
Acceptance involves acknowledging the risk and choosing to deal with it without specific action, often when the risk is minor or the cost of mitigation outweighs the benefit.
5. Resistance:
Resistance is not a formal risk response strategy in risk management frameworks such as PMBOK (Project Management Body of Knowledge) or ISO 31000. While the term might suggest opposing or pushing back against a risk, it lacks the structured, proactive approach necessary for effective risk management. It does not involve assessing likelihood or impact, nor does it reduce or transfer risk in a meaningful way. Hence, it is not considered a valid or effective response.
Conclusion:
Among the choices provided, resistance stands out as the only term that is not an accepted or formal response to risk. Thus, the correct answer is c. Resistance.
Would you like a visual diagram summarizing the four primary risk responses?