In which of the following cases, would an organization be more prone to risk acceptance vs. risk mitigation?

Question

Options

• AThe organization uses exclusively a quantitative process to measure risk
• BThe organization uses exclusively a qualitative process to measure risk
• CThe organization's risk tolerance is high
• DThe organization's risk tolerance is low

• A
  3% (1)
• B
  15% (6)
• C
  74% (29)
• D
  8% (3)

Explanation

Risk tolerance directly determines whether an organization accepts or mitigates risk: when tolerance is high, the organization is comfortable absorbing potential losses without acting, making risk acceptance the natural default over costly mitigation measures.

Why the distractors are wrong:

• A & B - The measurement method (quantitative vs. qualitative) describes how risk is assessed, not how the organization responds to it. Either method can lead to acceptance or mitigation depending on the findings.
• D - Low risk tolerance means the organization is less comfortable with uncertainty, so it would lean toward mitigation, transfer, or avoidance - not acceptance.

Memory tip: Think of it like a personal financial risk appetite - a high-risk investor accepts volatility and rides it out, while a low-risk investor mitigates by moving to safer assets. Same logic applies to organizations.

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