The Portfolio View of ERM Is One in Which Management

question 10

Multiple Choice

The portfolio view of ERM is one in which management reduces risks to acceptable levels by:

• A) sharing risks with employees.
• B) considering individual business unit risks and then aggregating those risks across the entity.
• C) avoiding the use of third party service providers in all instances except those with the highest risk of business interruption.
• D) terminating all entity activities that cause significant risk.

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Definitions:

Taxing

The process of levying charges on citizens or organizations by a government to fund public services and initiatives.

Marginal Damage Cost

The additional cost incurred from producing one more unit of a good or service, which often relates to the negative externalities or damages caused by the increase in production.

Marginal Cost

The increase in total production cost that results from making one additional unit of a product.

Tradeable Pollution Permits

Tradable Pollution Permits are a market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants.