A sensible corporate risk strategy needs answers to three of these questions.Which is the odd man out?
A) What are the major risks that the company faces?
B) Is the company being paid for taking these risks?
C) Can we spot any mispriced derivative contracts?
D) Can the company reduce the probability of a bad outcome?

Question

Quizplus · Accepted Answer

Options A, B, and D are all critical considerations when developing a corporate risk strategy. Understanding the major risks that the company faces is necessary for prioritizing risk mitigation efforts. Assessing whether the company is being adequately compensated for taking certain risks can inform decisions about risk acceptance or avoidance. Finally, considering how to reduce the probability of a bad outcome can help mitigate risks. Option C, on the other hand, is focused specifically on derivative contracts and may not be relevant for all companies or industries.

A Sensible Corporate Risk Strategy Needs Answers to Three of These