In a newly established asset management firm, a group of risk managers has been assigned to implement a comprehensive risk management strategy that includes three crucial components: risk planning, risk budgeting, and risk monitoring. As their first step, the team evaluates the components and principles detailed in the risk plan. Which of the following statements is correct?

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Qualitative scenario analyses can be incorporated into a risk plan to identify factors that can cause aspects of the risk plan to fail.

62.2%

A risk plan can set volatility goals but cannot incorporate the effects of the organization's key dependencies on these goals.

20.0%

Extreme events should not be included in an organization's risk plan but they should be included in its strategic plan.

6.7%

A risk plan should include an estimate of return on equity found by using the return on risk capital for each allocation taken independently.

11.1%

Financial Risk Manager Part 2