You are the risk professional of your enterprise.
Your enterprise has introduced new systems in many departments.
The business requirements that were to be addressed by the new system are still unfulfilled, and the process has been a waste of resources.
Even if the system is implemented, it will most likely be underutilized and not maintained making it obsolete in a short period of time.
What kind of risk is it?
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A. B. C. D.B.
Business risk relates to the likelihood that the new system may not meet the user business needs, requirements and expectations.
Here in this stem it is said that the business requirements that were to be addressed by the new system are still unfulfilled, therefore it is a business risk.
Incorrect Answers: A: This is one of the components of risk.
Inherent risk is the risk level or exposure without applying controls or other management actions into account.
But here in this stem no description of control is given, hence it cannot be concluded whether it is an inherent risk or not.
C: Project risk are related to the delay in project deliverables.
The project activities to design and develop the system exceed the limits of the financial resources set aside for the project.
As a result, the project completion will be delayed.
They are not related to fulfillment of business requirements.
D: This is one of the components of risk.
Residual risk is the risk that remains after applying controls.
But here in this stem no description of control is given, hence it cannot be concluded whether it is a residual risk or not.
Based on the scenario provided, the type of risk being described is most likely a "Project Risk" (option C).
Project Risk refers to the risks that are associated with the successful completion of a project, which may include the development, implementation, and maintenance of a new system. In this case, the new system that has been introduced has not met the business requirements, which indicates a failure in the project objectives.
The fact that the system is likely to be underutilized and not maintained also indicates that the project risks are high, as the system may become obsolete in a short period of time. This means that the investment in the project will be wasted, leading to a significant financial impact on the enterprise.
In contrast, Inherent Risk refers to the risk that exists in a system or process due to its nature, irrespective of any controls that may be put in place. It is an inherent property of the system, and cannot be eliminated entirely.
Business Risk, on the other hand, refers to the risks that are associated with the overall operation of a business. These risks may include financial risks, operational risks, legal risks, and reputational risks, among others.
Residual Risk refers to the risk that remains after all the risk management activities have been completed. It is the risk that cannot be eliminated, but can be mitigated through the implementation of risk controls.
Therefore, in this scenario, the risk being described is most likely a Project Risk, as the project has failed to meet the business requirements and is likely to be underutilized and not maintained, leading to a wasted investment.