When a healthcare organization buys cybersecurity insurance, what type of risk management is this an example of?

Purchasing cybersecurity insurance is a clear example of risk transfer. This strategy involves shifting the financial burden associated with potential data breaches or cyber-attacks from the healthcare organization to an insurance provider. By obtaining this coverage, the organization is less vulnerable to the financial consequences of a cybersecurity incident, as the insurance policy can help cover costs related to data recovery, legal fees, and regulatory fines.

Risk transfer is vital in risk management because it allows organizations to mitigate the impact of specific risks without eliminating them entirely. While the healthcare organization still faces the risk of a cyber incident, transferring the financial implications allows it to better allocate its resources and focus on other critical areas of operation.

Other types of risk management approaches, such as risk avoidance or risk reduction, would involve either completely eliminating the risk or implementing controls to minimize its impact. Risk retention relates to accepting the risk and preparing to manage the consequences within the organization's budget. In this case, opting for cybersecurity insurance does not fit these definitions, reinforcing why risk transfer is the appropriate classification for this scenario.