In risk assessment, "transfer or share risk" typically means what?

In risk assessment, "transfer or share risk" refers to the practice of shifting the burden of risk to another party, which is commonly achieved through mechanisms such as insurance, outsourcing, or contractual agreements. This strategy does not eliminate the risk entirely; rather, it allocates the potential consequences of the risk to a third party that is better equipped or more willing to handle those consequences.

For example, when a company purchases insurance, it transfers a significant portion of its financial risk associated with potential losses to the insurance provider. This allows the organization to focus on its core operations without bearing the full impact of the risk itself.

Other options are not accurate representations of risk transfer. Completely eliminating risk, for instance, is not feasible in most cases and doesn't align with the concept of transferring it. Monitoring risk without intervention refers to a passive approach rather than an active transfer strategy. Allowing risk to occur unmonitored also undermines proactive risk management practices and does not reflect the intention behind risk sharing or transfer. Ultimately, the essence of transferring risk is the deliberate act of reallocating it to another party, which helps organizations manage their overall risk exposure more effectively.