1.How can a company determine the true importance of a risk.
2.When is risk avoidance the best option for management? Explain your answer.
3.What are some of the responsibilities of the Chief Risk Officer (CFO)?
1. How can a company determine the true importance of a risk.
Companies only really determine the true importance of risk when thoroughly analyzing their industry and the appropriate amount of risk that the company wants to assume. Each company builds their own specific element, which is called a risk appetite. Basically, each company determines, according to their risk appetite, how much risk they can safely handle. Management can then place an importance on the level of risk based on the company's risk appetite. The true importance of risk has to be taken into consideration along with the elements of how much risk ...
In this solution, we discuss the importance of risk, how to determine the importance of risk, and when risk avoidance is the best option. We also discuss the responsibilities of the Chief Financial Officer.