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NEW QUESTION: 1
You are the HR Professional for your organization and you've identified a risk event. The risk event can be mitigated by purchasing an insurance to protect the organization. You've also identified that the probability of the risk event is only 20 percent. If management doesn't want to purchase the insurance to mitigate the risk event, what other choice do they have to respond to the event by using an out-of-pocket payment if the event actually occurs?
Answer option D is correct.
Acceptance is a risk response that accepts the event with the understanding that if the event happens, the organization will deal with the ramifications and impact at the time of the event. Out-of-pocket payments are an example of acceptance.
Acceptance response is a part of the Risk Response planning process. Acceptance response delineates that the project plan will not be changed to deal with the risk. Management may develop a contingency plan if the risk does occur. Acceptance response to a risk event is a strategy that can be used for risks that pose either threats or opportunities. Acceptance response can be of two types:
Passive acceptance: It is a strategy in which no plans are made to avoid or mitigate the risk.
Active acceptance: Such responses include developing contingency reserves to deal with risks in case they occur.
Acceptance is the only response for both threats and opportunities.
Answer option B is incorrect. Mitigation reduces the probability and/or impact of risk event.
Answer option A is incorrect. Transference transfers the risk event to a third party, usually for a fee.
Answer option C is incorrect. Sharing is a positive risk response where an organization partners with another entity to realize an opportunity. A teaming agreement between competitors is an example of sharing.
Reference: Professional in Human Resources Certification Study Guide, Sybex, ISBN: 978-0-470-43096-5.
Chapter Four: Workforce Planning and Employment. Official PHR and SPHR Certification Guide, HR Certification Institute, ISBN: 978-1-586-44149-4, Section III, The US Body of Knowledge.
Chapter: Risk Management
Objective: Risk Management
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