A PRIMARY advantage of involving business management in evaluating and managing risk is that management:
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A. B. C. D.A.
The correct answer is A. can make better informed business decisions.
Involving business management in evaluating and managing risk has several advantages. One of the primary advantages is that it enables better-informed business decisions. Here's why:
Business context: Business management understands the business context better than risk management. They are more familiar with the organization's mission, objectives, strategy, and stakeholders. By involving business management, risk management can get a better understanding of the business context in which risks arise. This can help in identifying and assessing risks more accurately.
Business impact: Business management understands the potential impact of risks on the organization's objectives and strategy. They can evaluate risks in terms of their impact on revenue, reputation, compliance, and other business objectives. By involving business management, risk management can prioritize risks based on their potential impact on the business.
Business trade-offs: Business management is responsible for making trade-offs between risks and rewards. They are more familiar with the organization's risk appetite and tolerance. By involving business management, risk management can align risk management strategies with the organization's risk appetite and tolerance. This can help in balancing technical and business risk (option C).
Business decisions: Ultimately, risk management is about making better business decisions. By involving business management, risk management can ensure that risk management strategies are aligned with the organization's objectives and strategy. This can help in making more informed business decisions (option A).
Option D ("is more objective than risk management") is incorrect because business management is not necessarily more objective than risk management. Both business management and risk management have biases and subjective judgments. However, by involving both parties in risk management, the biases and subjective judgments can be balanced and mitigated.
Option B ("better understands the system architecture") is incorrect because understanding the system architecture is more relevant to technical risk management, which involves identifying and assessing vulnerabilities and threats to the system. Business management may not necessarily have a deep understanding of the system architecture, but they can provide valuable input on the business impact and trade-offs associated with technical risks.