Which risk management strategy allows organizations to share the risk with others?

The strategy that enables organizations to share the risk with others is known as risk transfer. This approach generally involves transferring the financial burden of a potential loss to a third party, often through mechanisms like insurance or contractual agreements. In doing so, an organization can mitigate its exposure to specific risks by ensuring that another entity, such as an insurance company, takes on a portion or the entirety of the responsibility for those risks.

For instance, purchasing insurance provides a clear example of risk transfer, as it allows the organization to pay premiums to protect against potential losses, thereby sharing the risk with the insurer. This helps the organization maintain its financial stability even in the face of incidents that might otherwise result in significant losses.

The use of risk transfer fits well within a comprehensive risk management strategy, as it allows an organization to focus on its core operations without bearing the full impact of certain risks.