The Most Appropriate Course of Action for Low Risk Occurrence Rate and High Impact is...
Question
Which of the following is the MOST appropriate course of action when the risk occurrence rate is low but the impact is high?
Answers
Explanations
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A. B. C. D.A.
When the risk occurrence rate is low but the impact is high, it indicates that the risk has a low likelihood of occurring but will have a significant impact on the organization if it does occur. In this scenario, the most appropriate course of action is to mitigate the risk.
Risk mitigation involves reducing the likelihood of the risk occurring and/or reducing the impact of the risk if it does occur. This approach is appropriate when the potential impact of the risk is significant, even though the likelihood of occurrence is low.
Risk transfer involves transferring the risk to a third party, such as an insurance company or a contractor, which can assume the risk on behalf of the organization. However, this approach is generally not appropriate for risks with low occurrence rates and high impacts, as insurance premiums or contractor fees may be high.
Risk acceptance involves acknowledging the existence of the risk and deciding not to take any action to mitigate it. This approach is appropriate for risks with low impact and low occurrence rates, but it is not appropriate for risks with high impacts.
Risk avoidance involves eliminating the risk altogether by avoiding the activity or situation that poses the risk. This approach may be appropriate in some cases, but it is generally not feasible for risks that are inherent to an organization's operations.
Therefore, the most appropriate course of action when the risk occurrence rate is low but the impact is high is risk mitigation. This approach balances the potential impact of the risk with the likelihood of occurrence, and seeks to reduce both as much as possible.
