Risk Transfer

Risk transference or risk assignment is the process of assigning risk to another enterprise, commonly through the purchase of a premium insurance policy or by outsourcing the service altogether to an external party. Moreover, it involves the process of shifting some of the impact of a risk from the organization experiencing the risk to a third party or entity, such as cyber insurance companies. However, ultimately responsibility and liability cannot be transferred to a third party whatsoever the case.

The difference between risk mitigation and risk transfer is that in the case of risk mitigation process when organizations experience any risk they will deal with it until it is reduced to an acceptable level. Whereas in risk transfer process, the third party will be responsible to handle the risk according to their service level agreement (SLA). Furthermore, risk mitigation is the management and reduction of risk through the use of safeguards, countermeasures, and security control. However, risk transfer is the process of assigning risk to another organization through the purchase of insurance policy or outsourcing.