While defining the risk management strategies, what are the major parts to be determined first? Each correct answer represents a part of the solution.
Choose two.
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A. B. C. D.BC.
While defining the risk management strategies, risk professional should first identify and analyze the objectives of the organization and the risk tolerance.
Once the objectives of enterprise are known, risk professional can detect the possible risks which can occur in accomplishing those objectives.
Analyzing the risk tolerance would help in identifying the priorities of risk which is the latter steps in risk management.
Hence these two do the basic framework in risk management.
Incorrect Answers: A: IT architecture complexity is related to the risk assessment and not the risk management, as it does much help in evaluating each significant risk identified.
D: Risk assessment is one of the various phases that occur while managing risks, which uses quantitative and qualitative approach to evaluate risks.
Hence risk assessment criteria is only a part of this framework.
When defining risk management strategies, there are several factors to consider. Two of the most critical parts to determine first are:
Organizational Objectives: The organization's objectives must be identified as a critical part of the risk management strategy. It is essential to understand what the organization's goals and objectives are so that the risks can be evaluated in terms of their potential impact on achieving these objectives. By considering organizational objectives, it becomes easier to determine the risks that are most critical to the organization and prioritize them accordingly.
Risk Tolerance: Risk tolerance is another critical factor in defining risk management strategies. Risk tolerance refers to the amount of risk that an organization is willing to accept. By defining the organization's risk tolerance, the risk management strategy can be developed to ensure that risks are being managed at a level that is acceptable to the organization. Factors that can influence an organization's risk tolerance include its industry, regulatory environment, financial position, and competitive landscape.
Option A, IT architecture complexity, is not a part of the solution as it is a technical factor and not a critical part of defining risk management strategies.
Option D, Risk assessment criteria, is also an important factor to consider when defining risk management strategies. However, it is not one of the most critical parts to be determined first, as it is dependent on the organizational objectives and risk tolerance. Risk assessment criteria will be used to identify, evaluate and measure risks based on organizational objectives and risk tolerance.