Cyber Insurance Risk Management Strategy
A company purchased cyber insurance to address items listed on the risk register. Which of the following strategies does this represent?
Community Votes
100% of anonymous learners picked answer B. Votes are pick records left by other test-takers — they are not the verified answer.
Community Insight
The question tests the fundamental risk management strategies (Accept, Transfer, Mitigate, Avoid), specifically identifying that buying insurance shifts financial exposure to a third party rather than reducing the likelihood of an attack.
This page explains why purchasing cyber insurance represents a risk transfer strategy in enterprise security governance. It clarifies the distinction between transferring financial liability and mitigating technical vulnerabilities.
Learners often confuse 'Mitigate' with 'Transfer', believing that having insurance reduces the overall risk or impact on the organization's operations, whereas mitigation involves implementing controls to lower probability or impact directly.
Community Discussion (6 comments)
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Expert Analysis
Why the Answer Is Correct
Purchasing cyber insurance is a classic example of Risk Transfer (Option B). In risk management frameworks, transfer involves shifting the financial burden of a specific risk to another party, typically through contracts or insurance policies. The company does not eliminate the threat; instead, it ensures that if the incident occurs, the insurer covers the costs.Why the Other Options Are Wrong
Accept (A) would mean the company absorbs the cost without any external agreement or control changes. Mitigate (C) involves implementing technical or administrative controls (like firewalls or training) to reduce the likelihood or impact of the risk, which insurance does not do. Avoid (D) means ceasing the activity that causes the risk entirely (e.g., shutting down a vulnerable server), which is not what purchasing insurance entails.Community Comment Notes
The community consensus strongly supports Option B. As user metzen227 noted, "Transferring a risk involves shifting some or all of the risk to another party... through contractual agreements." Another commenter, Markie100, clarified that insurance ensures "the financial burden... is covered by the insurer," distinguishing it from elimination or reduction of the risk itself. Some users initially considered Mitigate but were corrected by the definition that insurance handles financial aftermath, not operational prevention.Exam Strategy
Always associate 'insurance' and 'contracts' with Risk Transfer. If the option involves changing technology or processes to prevent an incident, think Mitigation. If you stop doing the risky activity, think Avoidance.
Frequently Asked Questions
Does cyber insurance count as mitigation?
No. Mitigation involves implementing controls to reduce risk likelihood or impact. Insurance only transfers the financial consequence after the event occurs.
What is the difference between transfer and avoid?
Transfer keeps the activity running but pays a third party for losses. Avoid means stopping the activity entirely so the risk no longer exists.
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