A company president is concerned about the impact of a natural disaster on the company. How should management identify areas to apply its resources and mitigate potential impacts?
A.
Establish and keep an active risk register that includes mitigation strategies and a cost-benefit analysis
B.
Establish and keep an active risk register based on qualitative risk analysis and expected losses
C.
Have each development team post the highest risk development items on the information radiator
D.
Avoid risk by splitting development teams into two locations to ensure knowledge continuity
for B , While qualitative risk analysis and expected losses are important, this option does not mention the inclusion of mitigation strategies or cost-benefit analysis, which are crucial for comprehensive risk management.
A is correct :
Risk Register: A risk register is a tool used to document risks, their severity, and the actions steps to mitigate them. It is a key component of a robust risk management plan.
Mitigation Strategies: By including mitigation strategies, the risk register provides a clear plan for addressing each identified risk, helping to minimize potential impacts.
Option A offers a more comprehensive and actionable approach: It goes beyond simply identifying risks and estimating losses. It provides concrete steps to address them, considering both their impact and financial feasibility. This allows for strategic decision-making and resource allocation.
Option B relies solely on qualitative analysis and expected losses: This can be a good starting point, but it might lack critical information for effective mitigation. Including mitigation strategies and cost-benefit analyses in the register significantly enhances its value for managing potential impacts.
While both options identify risks, A provides a more robust framework for managing them: This includes proactive planning, informed resource allocation, and continuous adaptation based on changing circumstances. Option B focuses more on potential downsides without offering a clear roadmap for addressing them.
C and D might be correct but as a result of taking an action according to the previously established risk register. So they cannot be correct answers.
The difference between A and B is that:
- A = includes mitigation strategies and a cost-benefit analysis
- B = includes qualitative risk analysis and expected losses
A is the more suitable answer to the described situation.
I change to B - it is more appropriate since it cannot mitigate a natural disaster (ex. flood), likewise, cost-benefit is irrelevant vs loss assessment.
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