The owner of each new initiative should present a business case to show the allocation of resources. This is considered a best practice in business operations. A well-structured business case provides a comprehensive overview of the initiative, including its objectives, alternatives, expected benefits, commercial aspects, and risks. By presenting a business case, the owner of the initiative can effectively communicate the potential value and risks of the initiative to stakeholders. This can facilitate informed decision-making and ensure that resources are allocated appropriately. Furthermore, a business case can serve as a reference point for monitoring and controlling the initiative as it progresses.

Choice B is incorrect. Operational risk assessment can be more complex than credit risk assessment when acquiring new assets. This is because operational risks involve a wide range of uncertainties, including those related to the integration of new assets into existing operations, changes in market conditions, and potential regulatory issues.

Choice C is incorrect. The acquired firm should provide as much information as possible to facilitate the operational risk assessment process. Withholding information can lead to incomplete or inaccurate risk assessments, which could potentially expose the business to unforeseen risks and liabilities.

Choice D is incorrect. When projects are merged, the risks associated with the acquired assets do not necessarily remain with the original firm. Instead, these risks are typically transferred to or shared with the acquiring entity depending on the terms of acquisition agreement.

Things to Remember

• Operational Risk: Involves the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.
• Credit Risk: The risk of loss resulting from a borrower's failure to repay a loan or meet contractual obligations.
• Business Case: A document that outlines the justification for a project or initiative by detailing its objectives, benefits, costs, and risks.
• Stakeholders: Individuals or groups who have an interest in the success of a project or initiative and can influence or be influenced by its outcomes.
• Integration Risks: Risks associated with combining new assets or operations with existing ones, including challenges in systems, processes, and culture.