The preferred approach to developing a balanced portfolio risk management plan is to manage the:

Question

Options

• Aduration against risks with high probability and impact.
• Boverall expected return against known risks.
• Cresources against the overall expected return.
• Dstrategic value against the capability and capacity.

• A
  6% (2)
• B
  3% (1)
• C
  3% (1)
• D
  88% (30)

Explanation

A balanced portfolio risk management plan must weigh what the portfolio is strategically trying to achieve (strategic value) against what the organization is actually able to deliver (capability and capacity). This balance ensures that risk responses are both strategically meaningful and operationally feasible. Managing duration against high-probability risks (A) or return against known risks (B) focuses too narrowly on financial or temporal factors. Managing resources against expected return (C) ignores strategic alignment. Only option D ensures the risk plan supports organizational strategy while remaining grounded in realistic execution capability.

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