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The board of directors of an insurance company has identified several potential opportunities for expansion that require careful evaluation. To strategically assess these opportunities and establish a robust risk management framework for the entire organization, the risk committee has recommended implementing an Enterprise Risk Management (ERM) initiative. Considering the options provided, which would be the most appropriate objective for the company to pursue 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.