To which level the risk should be reduced to accomplish the objective of risk management?
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A. B. C. D.C.
The main objective of risk management is to reduce risk to a level that the organization or company will accept, as the risk can never be completely eliminated.
Incorrect Answers: A, B: There are no such concepts existing in manipulating risk level.
D: Risk mitigation involves identification, planning, and conduct of actions for reducing risk.
Because the elimination of all risk is usually impractical or close to impossible, it is aimed at reducing risk to an acceptable level with minimal adverse impact on the organization's resources and mission.
The objective of risk management is to identify, assess, and prioritize risks in order to minimize the negative impact of potential events on an organization's objectives. To accomplish this objective, risks must be reduced to a level that the organization can tolerate.
Option A suggests reducing the risk to a level where the Annualized Loss Expectancy (ALE) is lower than the Single Loss Expectancy (SLE). The ALE is the expected loss from a risk over a one-year period, while the SLE is the potential loss from a single event. This option implies that risk should be reduced to a level where the expected loss over a year is less than the potential loss from a single event, which is not a practical approach as organizations may face several events in a year.
Option B states that risk should be reduced to a level where the Annualized Rate of Occurrence (ARO) equals the SLE. The ARO is the expected number of times a particular threat will occur in a year. This option suggests that risk should be reduced to a level where the expected number of times the threat occurs in a year is equal to the potential loss from a single event, which is also not practical.
Option C suggests that risk should be reduced to a level that the organization can accept. This option recognizes that some risks cannot be eliminated, and the organization must be able to tolerate the residual risk. However, this option does not provide a specific level of risk reduction.
Option D states that risk should be reduced to a level that the organization can mitigate. This option suggests that risks should be reduced to a level that the organization can control or manage through risk mitigation strategies such as risk avoidance, risk transfer, risk reduction, or risk acceptance.
Therefore, the most appropriate answer to the question is option D - risk should be reduced to a level that the organization can mitigate. This option considers the practicality of risk reduction and acknowledges that residual risk may exist, but it should be at a level that the organization can manage effectively.