Which risk management strategy involves sharing risk?

The strategy that involves sharing risk is transferring risk. This approach is commonly used when an organization decides to offload some or all of the risk associated with a particular asset or activity to another entity. This often takes the form of insurance, outsourcing, or contractual arrangements where the risk is partially or fully assumed by a third party.

In the realm of risk management, transferring risk is a proactive method to mitigate potential losses because it allows organizations to limit their exposure while still pursuing their business objectives. This can provide peace of mind and financial stability, as the burden of potential losses is lessened through the agreement with another party.

In contrast, tolerating risk refers to accepting the risk without any changes; terminating risk means eliminating the risk entirely; while treating risk involves implementing measures to minimize or control the risk. Each of these strategies has its own set of implications, but only transferring risk specifically denotes the sharing aspect of risk management.