CISR Elements of Risk Management Practice Test 2026 – Complete Exam Prep

Risk transfer is a fundamental approach in risk management. Insurance is designed to move the financial consequences of specified risks from the insured to the insurer in exchange for a premium. When a covered loss occurs, the insurer pays up to the policy terms, shifting the burden away from the insured. This transfer isn’t about eliminating risk entirely—deductibles, exclusions, and policy limits mean some risk remains—but the economic impact is still transferred. Because of that, the statement that insurance is a transfer of risk is true, so the claim that it is false is incorrect.