What can transform a risk into a liability?

When considering the transformation of a risk into a liability, effective management is crucial. A risk becomes a liability when it is not effectively managed, leading to potential negative outcomes for the project. This lack of management can manifest as unforeseen problems, financial costs, or delays that can derail the project and create legal exposure.

By not addressing risks appropriately, a project manager might find that the project's vulnerabilities are exacerbated, resulting in greater impacts than initially anticipated. This underscores the importance of proactive risk management strategies, where risks are identified, assessed, and monitored to mitigate their potential effects on the project's success. Conversely, the other options focus on monitoring or informing stakeholders, neither of which directly addresses the management of risks in a way that would prevent them from becoming liabilities.