7.10

Risk Assessment

Principle 7 - Identify, Analyze, and Respond to Risks

Attribute 7.10 - Management designs responses to the analyzed risks so that risks are within the defined risk tolerance for the defined objective.⁴⁷ Management designs overall risk responses for the analyzed risks based on the significance of the risk, defined risk tolerance, and cost-benefit determination.⁴⁸ These risk responses may include the following:

• Acceptance - No action is taken to respond to the risk.
• Avoidance - Action is taken to stop the business process or the part of the business process causing the risk.
• Reduction - Action is taken to reduce the likelihood or magnitude of the risk.
• Sharing - Action is taken to transfer or share risks across the entity or with external parties, such as insuring against losses.

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