Why Define a Risk Response?

B.

The purpose of defining a risk response is to ensure that the residual risk is within the limits of the risk appetite and tolerance of the enterprise.

Risk response is based on selecting the correct, prioritized response to risk, based on the level of risk, the enterprise's risk tolerance and the cost or benefit of the particular risk response option.

Incorrect Answers: A: Risk cannot be completely eliminated from the enterprise.

C: This is not a valid answer.

D: Mitigation of risk is itself the risk response process, not the reason behind this.

The BEST reason for defining a risk response is to mitigate risk. Risk response is a process that is used to identify, assess, and prioritize risks and then develop and implement strategies to reduce, transfer, accept or avoid them. The goal of defining a risk response is to mitigate the risks to an acceptable level so that the organization can achieve its objectives.

A. To eliminate risk from the enterprise: It is not possible to eliminate all risks completely. There are always inherent risks associated with any business or organization, and it is not practical to attempt to eliminate them all. Instead, the goal is to reduce risks to an acceptable level.

B. To ensure that the residual risk is within the limits of the risk appetite and tolerance: This is a valid reason for defining a risk response, but it is not the BEST reason. Risk appetite and tolerance are important factors that determine the level of risk that an organization is willing to accept. Defining a risk response ensures that the residual risk, which is the risk that remains after the response has been implemented, is within the acceptable limits.

C. To overview current status of risk: This reason is not sufficient for defining a risk response. While it is important to have an overview of the current status of risks, it is not the primary reason for defining a risk response. The focus should be on taking action to mitigate identified risks.

D. To mitigate risk: This is the BEST reason for defining a risk response. The ultimate goal of risk management is to mitigate risks to an acceptable level. Defining a risk response involves developing and implementing strategies to reduce, transfer, accept or avoid risks. The objective is to minimize the impact of risks on the organization and enable it to achieve its objectives.

In conclusion, the BEST reason for defining a risk response is to mitigate risk by developing and implementing strategies to reduce, transfer, accept or avoid them. This helps to minimize the impact of risks on the organization and enables it to achieve its objectives.