CUNA Certified Credit Union Internal Auditor (CCUIA) Practice Test

The strategy that involves accepting the existence of risk without taking action to mitigate it is known as risk acceptance. Organizations may choose to accept certain risks when they believe that the potential impact or likelihood of the risk occurring is low, or when the cost of mitigating the risk is higher than the risk itself. This approach allows organizations to focus resources on other areas that may need more urgent attention.

Risk acceptance does not imply recklessness; rather, it is a calculated decision. It requires a thorough understanding of the risk and its implications. In many scenarios, organizations may determine that the potential benefits of a particular course of action outweigh the risks involved, which justifies the decision to accept those risks.

In contrast, risk avoidance would involve changing plans to sidestep the risk entirely, while risk limitation would entail implementing measures to reduce the impact or likelihood of the risk. Risk transference involves shifting the risk to another party, often through contracts or insurance. Each of these alternatives represents a proactive approach to risk management, unlike risk acceptance, which is characterized by the decision to acknowledge and live with the risk as it stands.