A financial services company recently completed a risk assessment and identified that a sophisticated ransomware attack could result in significant financial loss, far exceeding their acceptable risk threshold. While numerous security controls are in place to reduce the likelihood of an attack, the company decides to purchase a comprehensive cybersecurity insurance policy to cover potential costs from a breach. Which risk management principle does this action BEST represent?
The transfer risk management approach shifts the financial impact of a risk to a third party. In this scenario, by purchasing a cybersecurity insurance policy, the company is transferring the financial consequences of a ransomware attack to the insurance provider. Mitigation involves implementing controls to reduce risk, which the company had already done. Avoidance would mean ceasing the activity causing the risk, and acceptance would mean taking no further action to address the residual risk.
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What does transferring risk mean in the context of cybersecurity?
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How does transferring risk differ from mitigating risk?
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What role does insurance play in risk transfer strategies?