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Answer: The company's goals, expertise, strategies, and the government and regulatory landscape, which guide risk tolerance decisions.
**Explanation:** Option C is correct because factors such as a company's goals, expertise, and strategies are essential in determining which risks the company may pursue and with what intensity. Additionally, the government and regulatory landscape plays a critical role in shaping risk tolerance, both in terms of ex ante demands and ex post reactions to events. Option A is incorrect because while management compensation and personal motivations of board members may influence risk tolerance, they often do not align with the owners' best interests. Option B is incorrect because risk budgeting is a subsequent step that quantifies and allocates risk but does not determine the initial risk tolerance.
Author: LeetQuiz Editorial Team
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In the context of risk management, which of the following factors should be considered when determining an enterprise's risk tolerance?
A
Management compensation and personal motivations of board members, which may not align with the owners' best interests.
B
Risk budgeting, which quantifies and allocates tolerable risk but does not determine risk tolerance.
C
The company's goals, expertise, strategies, and the government and regulatory landscape, which guide risk tolerance decisions.
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