CGEIT · Question #130
Which of the following is the BEST method for determining an enterprise's current appetite for risk?
The correct answer is A. Interviewing senior management. To determine an enterprise's risk appetite, the most effective method is to directly consult senior management as they define the acceptable level of risk for the organization.
Question
Which of the following is the BEST method for determining an enterprise's current appetite for risk?
Options
- AInterviewing senior management
- BEvaluating the balanced scorecard
- CReviewing recent audit findings
- DAssessing social media adoption
How the community answered
(44 responses)- A82% (36)
- B11% (5)
- C2% (1)
- D5% (2)
Why each option
To determine an enterprise's risk appetite, the most effective method is to directly consult senior management as they define the acceptable level of risk for the organization.
Senior management, including the board of directors and executive leadership, is ultimately responsible for setting the organization's strategic objectives and, consequently, its risk appetite, making direct interviews the best way to understand their perspective.
A balanced scorecard evaluates performance across various perspectives (financial, customer, internal processes, learning and growth) but does not directly articulate the acceptable level of risk.
Recent audit findings highlight past deficiencies and control weaknesses but do not define the organization's forward-looking tolerance for risk.
Assessing social media adoption might relate to specific operational risks or opportunities but is not a comprehensive method for determining overall enterprise risk appetite.
Concept tested: Determining enterprise risk appetite
Source: https://www.isaca.org/resources/isaca-journal/issues/2021/volume-3/using-risk-appetite-to-manage-risk
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