Risk Management Capability Maturity Levels

CD.

Enterprise having risk management capability maturity level 4 and 5 takes business decisions considering the probability of loss and the probability of reward, i.e., considering all the aspects of risk.

Incorrect Answers: A: Enterprise having risk management capability maturity level 0 takes business decisions without considering risk credential information.

B: At this low level of risk management capability the enterprise takes decisions considering specific risk issues within functional and business silos (e.g., security, business continuity, operations).

The risk management capability maturity model provides a framework for organizations to evaluate and improve their risk management processes. The model consists of five levels, with each level representing a higher level of maturity in risk management capabilities.

Level 0: Ad-hoc At this level, risk management processes are not well-defined, and there is no formal risk management program. Risk management activities are ad-hoc and reactive, and decisions are made on a case-by-case basis.

Level 2: Defined At this level, risk management processes are formalized and documented. Risk management activities are integrated into the organization's overall business processes, and risk management policies and procedures are established. However, the organization's risk management practices are still not fully mature.

Level 4: Managed and Measurable At this level, risk management practices are integrated with the organization's overall business strategy. The organization uses a formalized and structured approach to risk management, with risk assessments and risk monitoring activities that are managed and measured. Risk management activities are coordinated and consistent across the organization.

Level 5: Optimized At this level, the organization's risk management practices are continuously monitored and improved. The organization has a mature risk management program, with risk management activities fully integrated into business processes. Risk management decisions are based on data-driven analysis and evaluation, and risk management activities are continuously improved through feedback and analysis.

In Level 4 and Level 5, the organization takes major business decisions considering the probability of loss and the probability of reward. Level 4 represents the point at which risk management is managed and measurable, while Level 5 represents the point at which risk management is optimized. Therefore, the correct answers are D. Level 4 and C. Level 5.