Which of the following is the MOST effective way to treat a risk such as a natural disaster that has a low probability and a high impact level?
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A. B. C. D.C.
Risks are typically transferred to insurance companies when the probability of an incident is low but the impact is high.
Examples include: hurricanes, tornados and earthquakes.
Implementing countermeasures may not be the most cost-effective approach to security management.
Eliminating the risk may not be possible.
Accepting the risk would leave the organization vulnerable to a catastrophic disaster which may cripple or ruin the organization.
It would be more cost effective to pay recurring insurance costs than to be affected by a disaster from which the organization cannot financially recover.
When dealing with a risk such as a natural disaster that has a low probability of occurring but a high impact level, it is important to consider the best approach for managing the risk.
A. Implement countermeasures: Implementing countermeasures can be effective in reducing the likelihood or impact of the risk. However, countermeasures can be expensive, time-consuming, and may not always be effective in preventing the risk. Additionally, implementing countermeasures for low probability risks may not be a wise investment of resources, especially if the potential impact is high. Therefore, this may not be the most effective way to treat this type of risk.
B. Eliminate the risk: Eliminating the risk completely may not be possible for a natural disaster, and attempting to do so may not be practical. Therefore, this option may not be the most effective way to treat this type of risk.
C. Transfer the risk: Transferring the risk to a third party, such as an insurance company, may be a viable option for managing the risk. However, it may be difficult to find an insurance policy that covers natural disasters with a low probability of occurring. Additionally, transferring the risk may not be practical if the potential impact is extremely high, as the cost of the insurance premium may be prohibitive.
D. Accept the risk: Accepting the risk means acknowledging the risk and deciding not to take any action to mitigate or transfer it. While this may seem counterintuitive, accepting the risk may be the most effective way to treat a natural disaster risk with a low probability of occurring and a high impact level. This approach allows resources to be focused on other risks that may have a higher likelihood of occurring, while accepting that the impact of the natural disaster cannot be fully mitigated.
In conclusion, the most effective way to treat a risk such as a natural disaster with a low probability of occurring but a high impact level may be to accept the risk. However, this decision should be made after careful consideration of the potential consequences and with a thorough understanding of the organization's risk appetite.