Which among the following acts as a trigger for risk response process?

B.

The risk response process is triggered when a risk exceeds the enterprise's risk tolerance level.

The acceptable variation relative to the achievement of an objective is termed as risk tolerance.

In other words, risk tolerance is the acceptable deviation from the level set by the risk appetite and business objectives.

Risk tolerance is defined at the enterprise level by the board and clearly communicated to all stakeholders.

A process should be in place to review and approve any exceptions to such standards.

Incorrect Answers: A, C: Risk appetite level is not relevant in triggering of risk response process.

Risk appetite is the amount of risk a company or other entity is willing to accept in pursuit of its mission.

This is the responsibility of the board to decide risk appetite of an enterprise.

When considering the risk appetite levels for the enterprise, the following two major factors should be taken into account: -> The enterprise's objective capacity to absorb loss, e.g., financial loss, reputation damage, etc.

-> The culture towards risk taking-cautious or aggressive.

In other words, the amount of loss the enterprise wants to accept in pursue of its objective fulfillment.

D: Risk response process is triggered when the risk level increases the risk tolerance level of the enterprise, and not when it just equates the risk tolerance level.

The trigger for risk response process is the point at which an identified risk requires a response from the organization. This trigger is determined by comparing the risk level with the organization's risk appetite and risk tolerance.

Risk appetite is the amount and type of risk that an organization is willing to accept in pursuit of its objectives. It is typically set by senior management and reflects the organization's overall risk culture and risk-taking philosophy.

Risk tolerance, on the other hand, is the amount of risk that an organization is willing to tolerate within a specific risk category or for a specific risk event. It is typically set by the risk owner or business unit and reflects the specific risk management objectives and constraints of that area.

With this understanding, we can now analyze the given answer choices:

A. Risk level increases above risk appetite - This answer choice suggests that the trigger for risk response process is when the risk level increases above the organization's risk appetite. This is a valid trigger because it indicates that the risk has exceeded the organization's willingness to accept it and requires a response.

B. Risk level increase above risk tolerance - This answer choice suggests that the trigger for risk response process is when the risk level increases above the organization's risk tolerance. This is also a valid trigger because it indicates that the risk has exceeded the level of risk that the business unit or risk owner is willing to tolerate.

C. Risk level equates risk appetite - This answer choice suggests that the trigger for risk response process is when the risk level equates to the organization's risk appetite. This is not a valid trigger because it implies that the risk level is acceptable to the organization, and therefore, does not require a response.

D. Risk level equates the risk tolerance - This answer choice suggests that the trigger for risk response process is when the risk level equates to the organization's risk tolerance. This is also not a valid trigger because it implies that the risk level is acceptable to the business unit or risk owner, and therefore, does not require a response.

In conclusion, the triggers for the risk response process are A. Risk level increases above risk appetite and B. Risk level increase above risk tolerance.