When reviewing the risk profile of an enterprise during the governance design phase, what MUST be established prior to conducting a high-level risk analysis?

Question

Options

• ARisk response strategy
• BKey risk indicators (KRIs)
• CEnterprise's risk appetite
• DRisk management framework

• A
  3% (1)
• B
  3% (1)
• C
  84% (26)
• D
  10% (3)

Explanation

Before conducting a high-level risk analysis during the governance design phase, it is necessary to establish the Enterprise's risk appetite (Option C). The enterprise's risk appetite is a statement of the level of risk that an organization is willing to accept in pursuit of its objectives. This information helps in setting the scope and objectives of the risk analysis, as well as guiding decisions on which risks to prioritize and manage. Understanding the enterprise's risk appetite is crucial in order to effectively assess and manage risks, and to align the governance framework with the enterprise's risk management goals and objectives. According to the ISACA COBIT 2019 official Manual, it is important to establish the enterprise's risk appetite prior to conducting a high-level risk analysis to ensure that the risk profile and risk assessment results are evaluated within the context of the organization's risk appetite and comfort zone. The risk appetite should be documented and approved by the board of directors or the governing body and should be used to determine the acceptable level of risk the organization is willing to bear.

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