PMP Exam Question – Risk Management Posted on March 6, 2020May 1, 2020 by gstramb Which of the following is not a valid instance of risk transference? A. Use of a Cost Reimbursable contract B. Warranties C. Fixed Price contracts D. Performance bonds
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Correct answer is A.
A cost-reimbursable contract does not transfer risk to the seller; rather, the risk is with the buyer.
Risk transference involves shifting the negative impact of a risk, along with the ownership of the response, to a third party.
Risk transference nearly always involves payment of a premium to the party taking on the risk.
Examples include performance bonds, warranties, and fixed price contracts.
PMBOK 6th edition, Page 443.