Which of the following operational risks ensures that the provision of a quality product is not overshadowed by the production costs of that product?
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A. B. C. D.D.
Profitability operational risks focus on the financial risks which encompass providing a quality product that is cost-effective in production.
It ensures that the provision of a quality product is not overshadowed by the production costs of that product.
Incorrect Answers: A: Information security means protecting information and information systems from unauthorized access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction.
Information security risks are the risks that are associated with the protection of these information and information systems.
B: These risks do not ensure that the provision of a quality product is not overshadowed by the production costs of that product.
C: Project activity risks are not associated with provision of a quality product or the production costs of that product.
The operational risk that ensures that the provision of a quality product is not overshadowed by the production costs of that product is profitability operational risk. Therefore, the correct answer is D.
Profitability operational risk refers to the potential for financial loss resulting from inadequate or failed internal processes, systems, or external events that affect the ability of an organization to achieve its financial goals. It is concerned with maintaining the balance between revenue generation and cost management. This risk relates to the achievement of profitability targets, margins, and earnings levels that are consistent with the organization's strategic goals.
In the context of the question, profitability operational risk is important because it ensures that the cost of producing a product does not exceed its market value. This is essential for maintaining a sustainable business model, as costs that are too high can negatively impact profit margins and make it difficult for the organization to remain competitive in the market.
Information security risks (option A) relate to the protection of information from unauthorized access, use, disclosure, disruption, modification, or destruction. These risks do not directly relate to the production costs of a product or the quality of that product.
Contract and product liability risks (option B) relate to the potential for financial loss resulting from legal disputes arising from breaches of contract or product defects. While these risks can impact profitability, they do not directly relate to the production costs of a product or the quality of that product.
Project activity risks (option C) relate to the potential for financial loss resulting from failed or delayed projects, inadequate project management, or external events that affect the ability of the organization to complete projects on time and within budget. While these risks can impact profitability, they do not directly relate to the production costs of a product or the quality of that product.