The risk appetite for an organization could be derived from which of the following?
A.
Cost of controls
B.
Annual loss expectancy (ALE)
C.
Inherent risk
D.
Residual risk
The Answer Is:
A
This question includes an explanation.
Explanation:
According to the CRISC Review Manual1, cost of controls is the amount of money or resources that an organization is willing to spend to implement and maintain risk responses. Cost of controls is one of the factors that influences the risk appetite of an organization, as it reflects thetrade-off between the benefits and costs of risk responses. Cost of controls helps to determine the optimal level of risk that an organization can accept in pursuit of its objectives, and to align the risk responses with the organization’s strategy, goals, and culture. References = CRISC Review Manual1, page 193.
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