Financial Risk Manager Part 1
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In the context of business operations, risk management plays a crucial role in ensuring the stability and sustainability of an organization. One approach to risk management is the enterprise-wide risk management. This approach is characterized by certain features that distinguish it from other risk management strategies. Based on your understanding of enterprise-wide risk management, which of the following best describes enterprise-wide risk management?
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TTanishq
A
Applying risk management within individual departments on a piecemeal basis.
B
Risk management that includes all major departments in a company.
C
A structured and consistent set of principles or risk management that are applied across the whole of a company.
D
Risk management that encompasses all business units.
Explanation:
Enterprise-wide risk management involves the development of structured and consistent business principles that govern the way different business units of a company do business, in regard to risk by applying consistent risk management principles across the whole of a company, all risks, including inter-departmental risks, are taken into account.
Why other options are incorrect:
- A: Applying risk management within individual departments on a piecemeal basis is a silo approach in which different departments/business units are left to manage risks on their own without considering the impact on other departments or the company as a whole.
- B: Enterprise risk management includes not only major departments in a company but also minor departments and all other areas of the company that may be exposed to risks.
- D: Enterprise risk management involves applying risk management to all business units, but it also includes a structured and consistent set of principles that guide the way risks are identified, assessed, monitored, and managed across the entire organization.
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