Risk transference typically involves which of the following?

Risk transference is a strategy in risk management that involves shifting the responsibility for a risk to a third party. This is often accomplished through various means such as purchasing insurance or outsourcing operations to a vendor who assumes the risk associated with certain activities. By doing this, an organization can protect itself from potential financial losses or liabilities that may arise from specific risks.

This approach allows the organization to continue its operations without having to bear the burden of those risks directly. It is an effective way to ensure that while some risks still exist, they do not place an undue financial strain on the organization.

In contrast, simply accepting the risk means taking it on without any mitigation measures, while ignoring the risk overlooks its potential repercussions entirely. Developing strategies to eliminate the risk can be more resource-intensive and may not always be viable or possible in practice. Thus, risk transference is a proactive financial management strategy enabling organizations to maintain a balance between risk and reward.