What are the requirements of effectively communicating risk analysis results to the relevant stakeholders? Each correct answer represents a part of the solution.
Choose three.
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A. B. C. D.ACD.
The result of risk analysis process is being communicated to relevant stakeholders.
The steps that are involved in communication are: -> The results should be reported in terms and formats that are useful to support business decisions.
-> Coordinate additional risk analysis activity as required by decision makers, like report rejection and scope adjustment.
-> Communicate the risk-return context clearly, which include probabilities of loss and/or gain, ranges, and confidence levels (if possible) that enable management to balance risk-return.
-> Identify the negative impacts of events that drive response decisions as well as positive impacts of events that represent opportunities which should channel back into the strategy and objective setting process.
-> Provide decision makers with an understanding of worst-case and most probable scenarios, due diligence exposures and significant reputation, legal or regulatory considerations.
Incorrect Answers: B: Both the negative and positive risk impacts are being communicated to relevant stakeholders.
Identify the negative impacts of events that drive response decisions as well as positive impacts of events that represent opportunities which should channel back into the strategy and objective setting process.
Effective communication of risk analysis results is crucial to ensuring that stakeholders understand the risks involved in a particular decision or activity. The following are three requirements for effectively communicating risk analysis results to the relevant stakeholders:
A. The results should be reported in terms and formats that are useful to support business decisions:
The communication of risk analysis results should be tailored to the specific needs and requirements of the stakeholders. This means that the results should be presented in a way that is easily understandable and actionable. It is important to use language and formats that are familiar to the stakeholders, such as charts, graphs, and tables. The communication should also highlight the potential impacts of the identified risks on the organization's objectives, and provide information that enables stakeholders to make informed decisions.
C. Communicate the risk-return context clearly:
Risk and return are interrelated, and any decision involving risk must be made in the context of the potential benefits or opportunities. Therefore, it is important to communicate the potential benefits or opportunities associated with the identified risks. This provides stakeholders with a clear understanding of the risks they are taking on, and helps them to evaluate the trade-offs between risk and return.
D. Provide decision makers with an understanding of worst-case and most probable scenarios:
It is important to communicate the potential impact of identified risks in terms of worst-case and most probable scenarios. This helps decision makers to understand the potential magnitude of the risk, and to evaluate the likelihood of different outcomes. The communication should also provide recommendations for risk mitigation strategies that can be employed to reduce the likelihood and/or impact of the identified risks.
B. Communicate only the negative risk impacts of events in order to drive response decisions:
This answer choice is incorrect. Communication of only negative risk impacts would give a biased view of the risks and would not allow stakeholders to fully understand the potential risks and benefits of the decision or activity. It is important to communicate all potential risks, both positive and negative, and to provide stakeholders with the information they need to make informed decisions.