What is the method of handling risk that involves changing the source of the risk?

The method of handling risk that involves changing the source of the risk is best identified as transferring the risk. This approach allows an organization to shift the impact of a risk to a third party, such as through outsourcing or purchasing insurance, thereby reducing the burden it faces from the risk itself.

Transferring risk does not eliminate it but rather ensures that another entity bears the financial or operational aspects of that risk. For example, by transferring a risk to an insurance company, the organization shifts the financial consequences of a potential loss to the insurer. This can also apply in contractual agreements where responsibilities are defined in a manner that mitigates the original party's exposure to risk.

In contrast to transferring, controlling risk would involve implementing measures to reduce the impact or likelihood of the risk occurring, while avoiding a risk means taking steps to eliminate the risk altogether, for instance by not engaging in a project that carries significant risks. Assuming a risk indicates acceptance of the potential consequences without any proactive measures taken to mitigate or transfer it. Understanding these differences clarifies why transferring risk is the appropriate method for changing the source of the risk.