IT-Risk-Fundamentals Exam Dumps : IT Risk Fundamentals Certificate Exam

 Setting KPIs:

A Key Performance Indicator (KPI) should be set at a level that allows for early detection and response to deviations from desired performance levels.

In this case, management wants to be alerted when error rates meet or exceed 4%, even though the acceptable limit is 5%.

 Alert Threshold:

Setting the KPI at 4% ensures that management receives timely alerts before reaching the unacceptable error rate of 5%.

This approach enables proactive management and correction of processes to maintain error rates within acceptable limits.

 References:

ISA 315 (Revised 2019), Anlage 5 discusses the importance of monitoring and setting appropriate thresholds for performance and risk indicators to manage and mitigate risks effectively​​.

A top-down approach to risk scenario development starts at the strategic level, with senior management defining the overall risk appetite and identifying key risks to the organization's objectives. A key benefit of this approach is that the focus at the enterprise level makes it easier to achieve management support (A). When senior management is involved from the beginning, they are more likely to understand and support the risk management process.

A top-down approach, by definition, considers risks across the enterprise, not just I&T (B). While it can inform risk ownership (C), that's not the primary benefit.

Expressing risk results in financial terms is most likely to promote ethical and open communication of risk management activities at the executive level. This is because financial metrics are universally understood and can clearly illustrate the impact of risks on the organization. By translating risk into financial terms, executives can more easily comprehend the severity and potential consequences of various risks, facilitating informed decision-making and fostering transparency. It also allows for a common language between different departments and stakeholders, enhancing clarity and reducing misunderstandings. This practice is emphasized in frameworks like ISO 31000 and is a key aspect of effective risk communication.