The Importance of a Risk Management Program
Question
A risk management program would be expected to:
Answers
Explanations
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A. B. C. D.B.
The object of risk management is to ensure that all residual risk is maintained at a level acceptable to the business; it is not intended to remove every identified risk or implement controls for every threat since this may not be cost-effective.
Control risk, i.e., that a control may not be effective, is a component of the program but is unlikely to be reduced to zero.
A risk management program is an organized approach to identify, assess, and prioritize risks to the security of an organization's assets, including people, systems, and data. The goal of a risk management program is to minimize the negative impact of risks on the organization and to maximize the benefits of opportunities.
Regarding the given options:
A. Remove all inherent risk: It is impossible to remove all inherent risks since every activity carries some level of risk, and some risks are unavoidable. Even the most robust security measures cannot eliminate all potential risks. Therefore, this option is not a realistic expectation of a risk management program.
B. Maintain residual risk at an acceptable level: Residual risk is the level of risk remaining after controls have been implemented to mitigate the inherent risk. The goal of a risk management program is to ensure that residual risk is reduced to an acceptable level based on the organization's risk tolerance. Therefore, this option is a reasonable expectation of a risk management program.
C. Implement preventive controls for every threat: Preventive controls are measures put in place to prevent security incidents from occurring. However, it is not feasible to implement preventive controls for every possible threat since new threats emerge continuously. Therefore, this option is not a realistic expectation of a risk management program.
D. Reduce control risk to zero: Control risk is the risk that a material misstatement will not be prevented or detected on a timely basis by the internal controls. It is not possible to reduce control risk to zero since there is always a risk that controls may fail. Therefore, this option is not a realistic expectation of a risk management program.
In conclusion, option B is the most realistic expectation of a risk management program. The goal of a risk management program is to maintain residual risk at an acceptable level, which is based on the organization's risk tolerance.
