Identify the Correct Statement About the Risk Management Matrix

question 30

Multiple Choice

Identify the correct statement about the risk management matrix.

• A)It is also referred to as a risk map.
• B)It involves charting entire spectrums of risk, not individual risk "silos" from each separate business unit.
• C)It includes all important risks a firm is exposed to.
• D)It includes on one axis, categories of relative frequency (high and low) and on the other, categories of relative severity (high and low).
• E)It puts the risks a company faces into a visual medium to see how risks are clustered and to understand the relationships among risks.

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Definitions:

Future Contract

A legal agreement to buy or sell a particular commodity or asset at a predetermined price at a specific time in the future, reiterating the concept of futures contracts with a focus on its nature as a legal agreement.

Spot Price

The current market price at which a particular asset can be bought or sold for immediate delivery.

Oil

A natural resource used as a primary energy source and raw material in various industries, whose market dynamics significantly influence global economics.

Profit/Loss

The financial result obtained when revenues exceed expenses (profit) or expenses exceed revenues (loss).