Adopting an Enterprise Risk Management Approach by an FI Is

question 95

Multiple Choice

Adopting an enterprise risk management approach by an FI is likely to result in all of the following EXCEPT

• A)prioritizing each risk and managing them as a portfolio of risks.
• B)recognizing that risk-taking is rooted in subtle behavioral characteristics.
• C)larger investments in risk management processes and systems.
• D)encouraging a culture of risk awareness and decisions throughout the organization.
• E)realignment of the stature and resources provided to risk management functions within the FI.

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Definitions:

Risk-averse

The tendency of individuals to prefer certainty over uncertainty, valuing predictable outcomes over those that are uncertain.

Auto Insurance

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident, covering liabilities such as injury and property damage.

Expected Utility

The anticipated satisfaction or benefit received from an outcome, weighted by the probability of different outcomes occurring.

Risk-averse

The preference to avoid risks, favoring safer outcomes over potentially higher but uncertain returns.