Which of the following should be considered to ensure that risk responses that are adopted are cost-effective and are aligned with business objectives? Each correct answer represents a part of the solution.
Choose three.
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A. B. C. D.ABD.
Risk responses require a formal approach to issues, opportunities and events to ensure that solutions are cost-effective and are aligned with business objectives.
The following should be considered: -> While preparing the risk response, identify the risk in business terms like loss of productivity, disclosure of confidential information, lost opportunity costs, etc.
-> Recognize the business risk appetite.
-> Follow an integrated approach in business.
Risk responses requiring an investment should be supported by a carefully planned business case that justifies the expenditure outlines alternatives and describes the justification for the alternative selected.
Incorrect Answers: C: There is no such requirement to follow the pre-defined risk responses.
If some new risk responses are discovered during the risk management of a particular project, they should be noted down in lesson leaned document so that project manager working on some other project could also utilize them.
To ensure that risk responses that are adopted are cost-effective and aligned with business objectives, the following three steps should be considered:
Identify the risk in business terms: The first step is to identify the risks in business terms. This involves understanding the nature of the risks, the likelihood of the risks occurring, and the potential impact of the risks on the business objectives. By identifying the risks in business terms, the organization can prioritize the risks and develop appropriate risk responses that are aligned with the business objectives.
Recognize the business risk appetite: The second step is to recognize the business risk appetite. This involves understanding the level of risk that the organization is willing to accept to achieve its business objectives. By recognizing the business risk appetite, the organization can develop risk responses that are consistent with the risk appetite and ensure that the risk responses are cost-effective.
Follow an integrated approach in business: The third step is to follow an integrated approach in business. This involves integrating risk management into the organization's overall business processes and decision-making. By following an integrated approach, the organization can ensure that risk management is aligned with the business objectives, and the risk responses are cost-effective.
It is important to note that adopting only pre-defined risk responses of business may not be the best approach, as each organization faces unique risks and requires customized risk responses. Therefore, a one-size-fits-all approach may not be effective in managing risks.