Which of the following statements is correct?
A) The best strategy to treat and mitigate risk is avoiding the risk by avoiding the business
B) The best strategy to treat and mitigate risk is transferring the risk to another party, e. g. by transfer to an insurance company
C) The best strategy to treat and mitigate risk is to establish the appropriate processes for identifying, assessing, managing, monitoring and reporting risks
D) The best strategy to treat and mitigate risk is to reduce the negative effect of the risk, e. g. by hedging

Question

Quizplus · Accepted Answer

Avoiding the risk by avoiding the business may not always be a viable option for companies. Transferring the risk to another party, such as an insurance company, only reduces the financial impact of the risk, but it does not address the root cause of the risk. Hedging can reduce the negative effect of the risk, but it does not eliminate it. The best strategy to treat and mitigate risk is to establish appropriate processes for identifying, assessing, managing, monitoring, and reporting risks. This allows companies to proactively manage risks and make informed decisions to minimize their impact.

Which of the Following Statements Is Correct