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The board of directors of the insurance company has identified several potential pathways for the organization's expansion that require thorough evaluation. To assess these opportunities and devise an optimal risk management framework for the entire firm, the risk committee has recommended the adoption of an Enterprise Risk Management (ERM) initiative. Considering the options listed below, which objective would be the most appropriate for the company to define as part of its ERM strategy?
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.