The risk management team of a software project has decided that due to the lack...

According to the PMBOK® Guide, specifically within the Plan Risk Responses process, there are several strategies for dealing with negative risks or threats. Transfer is the specific strategy used when the project team shifts the impact of a threat to a third party, together with ownership of the response.

Mechanism of Transfer: Risk transference nearly always involves the payment of a risk premium to the party taking on the risk. In project management, this is most commonly achieved through the use of contracts, insurance, or warranties.

The Outsourcing Example: By outsourcing the development to an external company that does have the adequate talent, the internal company is transferring the technical and performance risks associated with that specific component to the vendor. If the vendor fails to deliver, the contract typically includes penalties or clauses to protect the buyer.

Residual Risk: It is important to note that transferring a risk does not eliminate it; it simply makes another party responsible for its management.

Comparison with Other Options:

Share (B): This is a strategy for Opportunities (positive risks), not threats. It involves allocating some or all of the ownership of an opportunity to a third party who is best able to capture the benefit for the project (e.g., a joint venture).

Avoid (C): This involves changing the project management plan to eliminate the threat entirely. For example, changing the scope of the software to remove the requirement for that " high risk " part of the system altogether. Since the part is still being developed (just by someone else), the risk has been transferred, not avoided.

Accept (D): This occurs when the project team decides not to act on a risk, or is unable to identify any other suitable response strategy. It can be passive (doing nothing) or active (establishing a contingency reserve).