Which Risk Management Strategy Does Cyber Insurance Represent?
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 whether you can distinguish between actively reducing a risk's likelihood or impact through controls versus simply shifting its financial burden to a third party, with insurance serving as a classic transfer mechanism.
This question evaluates your understanding of the four primary risk response strategies, specifically identifying how purchasing cyber insurance aligns with risk transfer. The Security+ community overwhelmingly confirms that shifting financial liability to an insurer represents a transfer strategy rather than mitigation or acceptance.
Candidates frequently select 'Mitigate' because they assume insurance reduces the overall harm of a breach, but mitigation requires implementing actual security controls to lower probability or impact, whereas insurance only covers financial losses after an event occurs.
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Expert Analysis
Core Concept: Risk Response Strategies
In cybersecurity governance, organizations must select appropriate responses for identified risks. The four standard strategies are Avoid, Mitigate, Transfer, and Accept. This scenario directly addresses how financial instruments interact with organizational risk registers.Why Transfer Is Correct
Purchasing cyber insurance is a textbook example of Risk Transfer. As highlighted by multiple candidates, insurance does not prevent a breach from occurring; instead, it shifts the financial burden and potential liability to a third-party insurer via contractual agreements. When a company adds cyber insurance to its risk register, it acknowledges the risk exists but ensures that the monetary impact will be covered by the policy, perfectly aligning with the definition of transfer.Why Other Options Are Incorrect
- Mitigate (Option C): Many test-takers mistakenly choose this option, assuming that having insurance reduces the overall harm of an incident. However, mitigation involves implementing technical, administrative, or physical controls (like firewalls, patching, or training) to actively reduce either the likelihood or the impact of a threat. Insurance provides no such preventive control.
- Accept (Option A): Risk acceptance occurs when an organization acknowledges a risk but chooses not to spend resources addressing it, typically because the cost of remediation outweighs the potential loss. While accepted risks remain on the register, they are not offloaded financially to an external vendor.
- Avoid (Option D): Avoidance means completely eliminating the risk by discontinuing the activity that causes it (e.g., shutting down a vulnerable server or ceasing a risky business practice). Buying insurance does not remove the underlying vulnerability or threat.
Community Validation
The exam community consistently reinforces this distinction. Users emphasize that insurance contracts explicitly move financial responsibility away from the organization, confirming Transfer as the only accurate classification for SY0-701 objectives.Official Reference
Exam Strategy
When encountering risk-related questions, always ask yourself: 'Is the action changing the threat/vulnerability, or is it just paying for the consequences?' If the scenario involves financial compensation, warranties, or third-party contracts without altering security controls, the answer is almost always Transfer. Watch out for 'Mitigate' traps where options sound helpful but do not technically reduce likelihood or impact.
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