- CFA Exams
- CFA Exam: Level I 2021
- Study Session 19. Portfolio Management (2)
- Reading 55. An Introduction to Risk Management
- Subject 4. Measuring and Modifying Risks
CFA Practice Question
If a risk is considered to offer few rewards and lies outside the core competences of a company, the company should likely try ______ first.
B. risk transfer
C. risk shifting
A. risk prevention and avoidance
B. risk transfer
C. risk shifting
Correct Answer: A
Risk prevention and avoidance is probably the first choice of measures.
User Contributed Comments 5
| User | Comment |
|---|---|
| khalifa92 | if you could just transfer it. |
| Streberli | What's the difference between shifting and transferring? |
| khalifa92 | risk transfer: changes the risk bearer, risk shifting: changes the distribution of the risk. |
| zriddle | You would prefer to prevent or avoid the risk because it offers few rewards, and therefore would be hard to transfer or shift. |
| 10425406 | isk transfer changes the risk bearer, risk shifting changing the distribution of the risk |