Which of the Following Is an Example of Sharing Risk

question 147

Multiple Choice

Which of the following is an example of sharing risk?

• A) An organization redesigned a business process to change the risk pattern.
• B) An organization outsourced a portion of its services to a third-party service provider.
• C) An organization sold an unprofitable business unit to its competitor.
• D) In order to spread total risk, an organization used multiple vendors for critical materials.

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Definitions:

At-Risk Amount

The maximum amount of money an investor stands to lose in an investment, which limits loss deduction claims for tax purposes.

Passive Loss Rules

are tax rules that limit the ability to deduct losses from passive activities unless the taxpayer materially participates in the activity.

Passive Activity

Economic activities in which the investor does not materially participate, often related to rental property or businesses in which the person does not actively manage.

At-Risk Amount

The value of money that an investor can actually lose in an investment, often determining the limit of deductible losses in tax contexts.