Accounting Multiple Choice Question – 5 December 2024

Alex plc is concerned about the risk management of its information technology and computer systems function.

The IT systems director, Ted, has suggested that the information systems management function could be wholly outsourced to a third-party provider. 

This action would be a form of?

Select ONE answer:

1. Risk reduction
2. Risk transfer
3. Risk avoidance
4. Risk retention

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Alex plc is not retaining the risk by outsourcing (4). The risk still exists so it is not avoided (3), and outsourcing does not necessarily reduce the probability or impact (1). Instead, the risk is transferred (2).
3. Not correct
4. Not correct

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