Which of the Following Is a Risk of Outsourcing Information

question 9

Multiple Choice

Which of the following is a risk of outsourcing information systems?

• A) Vendors can gain access to critical knowledge of the outsourcing company.
• B) Vendors are not subject to a contractual agreement with the outsourcing company.
• C) The long-term costs of information systems are outweighed by their benefits.
• D) Organizations opting for outsourcing cannot gain economies of scale.

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Definitions:

Liability

Financial obligations or debts that a company or an individual owes to others, which are expected to be settled in the future.

Capital Lease

A lease agreement that grants the lessee control over an asset, and is recorded as an asset on their balance sheet, essentially treating it like a purchase.

Operating Leases

Lease agreements that allow for the use of an asset but do not convey rights of ownership, typically used for short-term leasing of equipment or vehicles.

Return On Assets

A financial metric that measures how efficiently a company's management is using its assets to generate earnings.