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In: Accounting

Explain Risk Response, one of the 8 interrelated risk and control components of enterprise risk management...

Explain Risk Response, one of the 8 interrelated risk and control components of enterprise risk management . (You’ll need to write about 5 sentences.)

Expert Solution

Risk response involves the process of controlling the risk that has been recognized.The stakeholders make their decisions based on the decisions made in the risk response stage.

It is necessary to analyze the likelihood and impact of the risk in the response stage ie the risk assessment and the risk type.

Risk response stage includes planning ways to reduce threats and increasing the opportunities.

If the threats cannot be eliminated the company need to have contingency plan to reduce the same.

All risks cannot be avoided.companies need to assess the risk possibility continuously once they enter into a project.

There are various types of responses towards risks.These are:

AVOID

Risk that should be avoided completely. Plans need to be changed accordingly.

TRANSFER

Rusk that can be transferred to a third party such as an Insurance company.

MITIGATE

Risks that can be reduced to a certain extent such as usage of machines and equipments that reduces workplace safety risks.

ACCEPT

Risks that are accepted as part of the game. Certain risk are unavoidable.

SHARE

Distribution of risks among various partners or shareholders.

CONTINGENCY

Plans made to handle the risk if it occurs in future.

ENHANCEMENT

The possibility of increasing a risk of the company.

ekkarill92 answered 1 year ago

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