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The board of an insurance company is exploring several potential opportunities for expansion and needs to assess these options to select the most appropriate risk management approach for the organization. The risk committee has recommended the implementation of an Enterprise Risk Management (ERM) initiative to facilitate this appraisal. Considering the adoption of ERM, which of the following objectives would be most appropriate for the company to articulate as part of this initiative?
A
Determine a risk-return trade-off that reflects the company's target credit rating and ensure that business unit managers evaluate new projects with this firm-wide target in mind.
B
Attempt to eliminate the company's probability of financial distress to maximize company value.
C
Maximize the firm's leverage ratio within its risk tolerance to ensure the highest expected return on equity.
D
Establish a target minimum level of annual earnings and guarantee to shareholders that it will maintain this level.