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A risk response is the action or plan that is taken to address a specific risk that has been identified, analyzed, and evaluated. It can be one of the following types: mitigate, transfer, avoid, or accept.

The highest priority when developing a risk response is to ensure that it aligns with the organization’s risk appetite, which is the amount and type of risk that the organization is willing to accept in pursuit of its goals. The risk appetite is usually expressed as a range or a threshold, and it is aligned with the organization’s strategy and culture.

Aligning the risk response with the organization’s risk appetite ensures that the risk response is consistent, appropriate, and proportional to the level and nature of the risk, and that it supports the organization’s objectives and values. It also helps to optimize the balance between risk and return, and to create and protect value for the organization and its stakeholders.

The other options are not the highest priority when developing a risk response, because they do not address the fundamental question of whether the risk response is suitable and acceptable for the organization.

The risk response addresses the risk with a holistic view means that the risk response considers the interrelationships and dependencies among the risk sources, events, impacts, and responses, and the potential secondary and residual effects of the risk response. This is important to ensure that the risk response is comprehensive and effective, and that it does not create new or unintended risks, but it is not the highest priority when developing a risk response, because it does not indicate whether the risk response is aligned with the organization’s risk appetite.

The risk response is based on a cost-benefit analysis means that the risk response compares the expected costs and benefits of implementing the risk response, and selects the risk response that provides the most favorable net outcome. This is important to ensure that the risk response is efficient and economical, and that it maximizes the return on investment, but it is not the highest priority when developing a risk response, because it does not indicate whether the risk response is aligned with the organization’s risk appetite.

The risk response is accounted for in the budget means that the risk response is included in the financial plan and allocation of resources for the organization or the project. This is important toensure that the risk response is feasible and realistic, and that it has the necessary funding and support, but it is not the highest priority when developing a risk response, because it does not indicate whether the risk response is aligned with the organization’s risk appetite. References =

ISACA, CRISC Review Manual, 7th Edition, 2022, pp. 29-30, 34-35, 38-39, 44-45, 50-51, 54-55

ISACA, CRISC Review Questions, Answers & Explanations Database, 2022, QID 147

Strategic decisions on risk management are the decisions that involve setting the direction, objectives, and priorities for risk management within an organization, as well as aligning them with the organization’s overall strategy, vision, and mission1. Strategic decisions on riskmanagement also involve defining the organization’s risk appetite and tolerance, which are the amount and level of risk that the organization is willing and able to accept to achieve its goals2. The responsibility for strategic decisions on risk management should belong to the executive management team, which is the group of senior leaders who have the authority and accountability for the organization’s performance and governance3. The executive management team has the best understanding of the organization’s strategic context, environment, and stakeholders, and can make informed and balanced decisions that consider the benefits and costsof risk-taking4. The executive management team also has the ability and responsibility to communicate and cascade the strategic decisions on risk management to the rest of the organization, and to monitor and evaluate their implementation and outcomes5. The chief information officer (CIO), the audit committee, and the business process owner are not the best choices for being responsible for strategic decisions on risk management, as they do not have the same level of authority and accountability as the executive management team. The CIO is the senior leader who oversees the organization’s information andtechnology strategy, resources, and systems6. The CIO may be involved in providing input and feedback to the executive management team on the strategic decisions on risk management, especially those related to IT risk, but they do not have the final say or the overall responsibility for them. The audit committee is a subcommittee of the board of directors that oversees the organization’s financial reporting, internal controls, and external audits7. The audit committee may be involved in reviewing and approving the strategic decisions on risk management, as well as ensuring their compliance with the relevant laws and standards, but they do not have the authority or the expertise to make or implement them. The business process owner is the person who has the authority and accountability for a business process that supports or enables the organization’s objectives and functions. The business process owner may be involved in executing and reporting on the strategic decisions on risk management, as well as identifying and mitigating the risks related to their business process, but they do not have the perspective or the influence to make or communicate them. References = 1: Strategic Risk Management: Complete Overview (With Examples)2: [Risk Appetite and Tolerance - ISACA] 3: [Senior Management - Definition, Roles andResponsibilities] 4: Stanford Strategic Decision and Risk Management | Stanford Online5: A 7-Step Process for Strategic Risk Management — RiskOptics - Reciprocity6: [Chief Information Officer (CIO) - Gartner ITGlossary] 7: [Audit Committee - Overview, Functions, and Responsibilities] : [Business Process Owner - Gartner IT Glossary] : [Business Process Owner - Roles and Responsibilities] : [Risk and Information Systems Control Study Manual, Chapter 1: IT Risk Identification, Section 1.1: IT Risk Concepts, pp. 17-19.]

Determining the business purpose of the application is the first thing that a risk practitioner should do when a shadow IT application is identified in a business owner’s business impactanalysis (BIA), because it helps to understand the rationale and value of the application, and the potential risks and issues that it may introduce or affect. A shadow IT application is an IT system or application that is used by the business units or employees without the knowledge or approval of the IT department or management. A shadow IT application may offer benefits such as convenience, efficiency, or innovation, but it may also pose risks such as security breaches, data loss, compatibility issues, or regulatory non-compliance. A BIA is a process of analyzing the potential impact of disruption to the critical business functions or processes, and identifying the recovery priorities and requirements. A BIA may reveal the existence of ashadow IT application, as it may be used to support or enable a critical business function or process. Determining the business purpose of the application is the first thing to do, as it helps to evaluate the necessity and suitability of the application, and to plan the appropriate actions to address the shadow IT application. Including the application in the business continuity plan (BCP), segregating the application from the network, and reporting the finding to management are all possible things to do after determining the business purpose of the application, but they are not the first thing to do, as they depend on the results of the evaluation of the application. References = Risk and Information Systems Control Study Manual, Chapter 4, Section 4.2.1, page 143

The best way to protect company sensitive information from being exposed when an organization allows employee use of social media accounts for work purposes is to require employees to sign nondisclosure agreements. Nondisclosure agreements are legal contracts that prohibit the employees from disclosing or sharing the company sensitive information with unauthorized parties, such as competitors, media, or regulators. Nondisclosure agreements also specify the scope, duration, and conditions of the nondisclosure obligation, and the penalties or remedies for breaching the agreement. Requiring employees to sign nondisclosure agreements is the best way to protect company sensitive information, as it helps to prevent or deter the employees from exposing or leaking the company sensitive information on social media, and to hold the employees accountable and liable for their actions. Requiring employees to signnondisclosure agreements also helps to comply with the legal and regulatory requirements for data protection and privacy. Educating employees on what needs to be kept confidential, implementing a data loss prevention (DLP) solution, and taking punitive action against employees who expose confidential data are also useful ways, but they are not as effective as requiring employees to sign nondisclosure agreements, as they are either dependent on the employees’ awareness or behavior, or reactive or corrective measures, rather than proactive or preventive measures. References = CRISC Review Manual, 6th Edition, ISACA, 2015, page 217.