One of the risk events you've identified is classified as force majeure.
What risk response is likely to be used?
Click on the arrows to vote for the correct answer
A. B. C. D.A.
Force majeure describes acts of God (Natural disaster), such as tornados and fires, and are usually accepted because there's little than can be done to mitigate these risks.
Incorrect Answers: B: Transference transfers the risk ownership to a third party, usually for a fee.
C: Enhance is used for a positive risk event, not for force majeure.
D: Mitigation isn't the best choice, as this lowers the probability and/or impact of the risk event.
Force majeure events refer to events that are beyond the control of an organization, such as natural disasters, wars, and other catastrophic events. These events can have a significant impact on an organization's operations and can lead to losses, disruptions, and downtime.
In terms of risk management, force majeure events are typically classified as "risks that cannot be controlled." In this case, the appropriate risk response is likely to be acceptance. Acceptance means that the organization acknowledges the risk, but decides not to take any specific action to address it. Instead, the organization may opt to rely on its existing contingency plans and disaster recovery strategies to minimize the impact of the event.
For example, if a company operates a data center in an area prone to earthquakes, it may choose to accept the risk of an earthquake and develop a disaster recovery plan that includes offsite backups and redundant infrastructure. In this way, the organization can minimize the impact of an earthquake and continue operations in the event of an earthquake.
Transference is another risk response option, which involves transferring the risk to another party, such as an insurance company. However, force majeure events are often excluded from insurance policies, so transference may not be a viable option.
Enhancement involves taking proactive steps to reduce the likelihood or impact of a risk event. However, force majeure events are typically beyond the control of an organization, so enhancement may not be feasible.
Mitigation involves taking actions to reduce the likelihood or impact of a risk event. However, force majeure events are typically beyond the control of an organization, so mitigation may not be possible.
In summary, the appropriate risk response for a force majeure event is likely to be acceptance, as it is often beyond the control of an organization and cannot be mitigated or enhanced.