Practice Quiz

FRM Financial Risk Manager Practice Test

Category - Risk

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What are the four options for dealing with a risk?
  1. Accept, mitigate, transfer, and avoid.
  2. Accept, insure, transfer, and avoid.
  3. Accept, mitigate, reduce, and avoid.
  4. Situation, task, action, and result.
  5. It’s a trick question-there are only three and they are transfer, mitigate, and avoid.
Explanation
Accept, mitigate, transfer, and avoid are the four acceptable ways of dealing with risk. Remember that mitigating and reducing are synonyms in risk management and that insuring is a form of transferring risk.

Key Takeaway: We want you to remember these four options and consider them each time you contemplate what to do with a risk. Our natural tendency is to avoid or mitigate, but sometimes that is not possible.
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