CompTIA DataX (CNX-001) — Question 6

A company is expanding operations and opening a new facility. The executive leadership team decides to purchase an insurance policy that will cover the cost of rebuilding the facility in case of a natural disaster. Which of the following describes the team's decision?

Answer options

• A. Business continuity
• B. Disaster recovery
• C. Risk transference
• D. Memorandum of understanding

Correct answer: C

Explanation

The correct answer is C, Risk transference, because purchasing an insurance policy shifts the financial risk associated with rebuilding the facility from the company to the insurance provider. Options A and B relate to plans for maintaining operations and recovering from disasters, respectively, while D refers to a formal agreement between parties, which does not apply in this context.