Answer says : Avoid.  Pls explain how it is ??

I feel, it is "Mitigation" Just they changed mitigation plan, by cancelling the contract (TRANSFER) , they decided to build component (Mitigate the risk)

Source PM Head First :

74. You are managing a software engineering project, when two team members come to you with a conflict. The lead developer has identified an important project risk: you have a subcontractor that may not deliver on time. Another developer doesn’t believe that the risk is likely to happen; however, you consult the lessons learned from previous projects and discover that subcontractors failed to deliver their work on two previous projects. You decide that the risk is too big; you terminate the contract with the subcontractor, and instead hire additional developers to build the component. Both team members agree that this has eliminated the risk. Which of the following BEST describes this scenario?

Transferrence

Mitigation

Avoidance

Acceptance