What does risk transference refer to in a security context?

Risk transference in a security context involves shifting part of the risk to another entity, which can be achieved through various means such as purchasing insurance, outsourcing services, or entering contractual agreements. This approach allows an organization to manage risk more effectively by transferring the financial impact or responsibility associated with certain risks to another party. For example, if a company hires a third-party data storage provider, they may transfer some of the risks related to data loss or breach to that provider, as stipulated in their contract.

This strategy is often used in conjunction with other risk management techniques, such as risk acceptance or mitigation, as organizations seek to create a comprehensive risk management plan that balances risk retention and transfer.