Exam SCR topic 1 question 32 discussion

Strategy and Setting Objectives, Goals, and Targets : An impor-tant prerequisite for strategic decisions is strategic landscape evaluation; this is especially the case in regard to climate issues. Understanding the full business context on climate risk requires understanding the external environment and megatrends, such as the expected physical, societal, and mac-roeconomic impacts of climate change.

pg. 136 6.6.2 Strategy and Setting OBjectives, Goals anf Targets

without doubt the answer is D. All the Climate Risks may not affect company in same way and it all depends on adaptability and exposure. therefore ranking the risks is the first step on the basis of severity.

I agree with gooforme that answer B seems to be correct. However, I believe that answer D is also correct: (6.6.3) Risk prioritization is especially important in an ERM context, as any large enterprise will be exposed to a multitude of risks, and it is important to rank these in order of importance. Ranking methods include ranking by likelihood of occurrence, adaptability and complexity, or severity. One way of ranking by severity is to examine what outcomes the risks affect, where risks affecting the fundamentals of business—profits, revenues, and asset values—are ranked as more severe than risks that only affect more ancillary out-comes such as employee morale or land use. Another way of prioritizing risks is to filter by the risks that the company can actually control.