According to the COSO Enterprise Risk Management - Integrated Framework, which of the following statements is true regarding the role of risk appetite in an organization?
A) Risk appetite reflects the organization's risk philosophy and influences its operating style.
B) A high risk appetite may limit capital investment in high risk areas.
C) Risk appetite is determined in part by how an entity allocates its resources.
D) Risk appetite is often best measured in the same units as its related objective.

Question

Quizplus · Accepted Answer

Risk appetite reflects the organization's risk philosophy and influences its operating style, as it determines the level of risk the organization is willing to accept in pursuit of its objectives.