Which risk management measure helps in reducing the risk levels by involving investments like insurance?

The correct response highlights the concept of risk transference, which is a strategy used to manage risk by shifting the burden of loss or responsibility for risk to another party. This is commonly achieved through mechanisms such as insurance. When an organization invests in insurance, it effectively transfers the financial consequences of certain risks to the insurance company. If a loss occurs, the insurance provides compensation, thus reducing the overall impact on the organization.

Risk transference is particularly useful for risks that can be quantified and for which financial protections are available, allowing organizations to manage their exposure while focusing on their core activities without being entirely threatened by potential losses. This strategic approach not only alleviates direct responsibility but also helps in stabilizing operational budgets, as predictable costs are transferred to an insurer.

In contrast, acceptance involves acknowledging the risk and choosing to bear the loss if it occurs. Appetite refers to the amount of risk an organization is willing to take on while mitigation focuses on reducing the likelihood or impact of risks through proactive measures. While these options play important roles in overall risk management, they do not specifically entail the investment aspect that risk transference embodies.