Explanation:
The silo approach to risk management allows individual business units within an organization to specialize in managing their specific risks. This specialization can lead to the development of a diverse range of risk management expertise within the organization. Each business unit can become highly skilled in managing its unique risks, leading to more effective and efficient risk management strategies. This approach can also foster a culture of ownership and accountability for risk management within each business unit. Furthermore, the silo approach can enable more thorough and detailed risk analysis, as each business unit can focus on its specific risk landscape without being distracted by the broader organizational risks. This can lead to the identification and mitigation of risks that might be overlooked in a more generalized, organization-wide risk
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Q.68 Which of the following arguments best explains why some companies prefer siloed risk management to ERM?
A
The silo approach simplifies the risk management process as each business unit works on a small 'slice' of the total risk exposure.
B
The silo approach promotes specialization, thus helps to develop a rich variety of risk management expertise within the organization.
C
The silo approach enables organizations to extensively analyze each risk without overlooking important aspects.
D
Managing risks in silos is more efficient and takes a shorter time compared to ERM.
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