When the cost to mitigate a risk exceeds the expected benefit, what should a risk practitioner recommend?

When the cost to mitigate a risk exceeds the expected benefit, what should a risk practitioner recommend?

• A. Transferred
• B. Terminated
• C. Accepted
• D. Treated

Answer: (C)

When the cost to mitigate a risk exceeds the expected benefit, the most appropriate recommendation for a risk practitioner is to accept the risk. This means acknowledging the existence of the risk without taking active steps to reduce its impact or likelihood. Accepting a risk may be the best course of action when the mitigation costs are not justified by the potential benefits. In this context, the risk is considered manageable and within the organization's risk tolerance level. Organizations often decide to accept risks when they involve low likelihood or impact, or when the resources required for mitigation would detract from other more critical initiatives. By accepting the risk, the organization retains the responsibility for any consequences that may arise, but it does so with the understanding of the trade-offs involved. This strategy allows for better allocation of resources to areas that can provide greater overall benefit to the organization.

When the cost to mitigate a risk exceeds the expected benefit, the most appropriate recommendation for a risk practitioner is to accept the risk. This means acknowledging the existence of the risk without taking active steps to reduce its impact or likelihood.

Accepting a risk may be the best course of action when the mitigation costs are not justified by the potential benefits. In this context, the risk is considered manageable and within the organization's risk tolerance level. Organizations often decide to accept risks when they involve low likelihood or impact, or when the resources required for mitigation would detract from other more critical initiatives.

By accepting the risk, the organization retains the responsibility for any consequences that may arise, but it does so with the understanding of the trade-offs involved. This strategy allows for better allocation of resources to areas that can provide greater overall benefit to the organization.