Which of the following is a risk response strategy that focuses on paying to handle potential losses?

The selected strategy emphasizes transferring the financial burden of potential losses to another party, typically through insurance or outsourcing to third-party organizations. This approach allows an organization to manage risk more effectively by shifting responsibility. For example, by purchasing insurance, a company can ensure it has the necessary financial resources to cover losses resulting from specific risks, thus preserving its capital and operational stability.

In contrast, acceptance involves acknowledging the risk without taking any action to mitigate or transfer it, which may lead to potential financial impact being absorbed by the organization. Mitigation focuses on reducing the likelihood or impact of the risk through proactive measures, while avoidance entails eliminating the risk entirely by changing plans or processes to avert the risk altogether. These strategies serve different risk management purposes but do not specifically relate to the financial handling of potential losses.