CAS Practice Exam 2025 – Complete Study Guide

Subcontracting work to others can significantly increase a business's liability exposure because it involves transferring certain tasks or responsibilities to other entities or individuals. When a business outsources work, it may still retain liability for the actions of the subcontracted party. If the subcontractor fails to deliver quality work or causes harm, the primary business can be held responsible for any resultant claims or damages. This situation can complicate liability issues, exposing the business to greater risks than if it had performed the work itself.

Moreover, the due diligence required in selecting reliable subcontractors is critical, as failing to vet them properly can open the business up to additional legal challenges. In contrast, while factors such as time in operation, number of employees, and business size can also influence liability, they typically do not create as immediate or direct a connection to increased risk as subcontracting does.