Certified Governance Risk and Compliance (CGRC) Practice Exam 2025 - Free CGRC Practice Questions and Study Guide

Transference is the risk response that specifically involves shifting the impact of a risk to a third party. This is often accomplished through outsourcing, insurance, or contractual agreements where another entity assumes responsibility for certain risks. By transferring the risk, an organization minimizes its potential financial or operational impact while ensuring that the risk is managed by someone who may be better equipped to handle it.

This strategy is particularly useful for risks that are potentially damaging but may not fall within the core competency of the organization. For example, a company might purchase insurance to protect against financial losses resulting from specific risks, effectively transferring the financial burden to the insurer.

In contrast, acceptance involves recognizing a risk and deciding to continue with the activity, understanding that the potential impact will be borne by the organization itself. Mitigation refers to efforts to reduce the probability or impact of a risk through various measures, rather than transferring it. Sharing suggests that two or more parties take on a portion of the risk together, but does not specifically indicate transferring the entire impact to a third party like transference does.