Answer: Both I and II

## Explanation Both statements I and II are correct: **I. Risk appetite directly impacts the allocation of resources** - Risk appetite defines the amount and type of risk an organization is willing to accept in pursuit of its objectives, which directly influences how resources (capital, personnel, technology) are allocated across different business activities and risk exposures. **II. Risk tolerance is a measure of an organization's ability to take risk** - Risk tolerance represents the organization's capacity to withstand losses or adverse outcomes, typically measured by financial metrics, regulatory requirements, or operational capabilities. It defines the boundaries within which risk can be taken. Both concepts are fundamental to effective risk management and strategic decision-making.

Author: LeetQuiz Editorial Team