What does risk acceptance entail?

• A. It does not reduce any effects and is a strategy used when the cost of other risk management options outweighs the cost of the risk itself.
• B. It imposes strict controls to avoid risk.
• C. It transfers risk to a third party.
• D. It completely eliminates exposure to the risk.

Answer: (C)

Risk acceptance means recognizing a risk and choosing not to implement controls to reduce it because the cost or effort of mitigation would outweigh the potential loss. It’s a conscious decision to tolerate the residual risk, often with monitoring and a plan to respond if the risk materializes. This approach fits when the expected impact is low or mitigation is too expensive to justify. Transferring risk to a third party is a different strategy known as risk transfer. Imposing strict controls to avoid risk describes risk avoidance or mitigation, and completely eliminating exposure to risk isn’t realistically possible—there will usually be some residual risk left.