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CFA Level I · CFA Level I Exam · Introduction to Risk Management

In the risk management process, the step that most likely follows identifying the risk exposures of an organization is:

After identifying risk exposures, the organization measures and prioritizes them. Measurement shows how large each risk is and how it compares with the risk tolerance, which allows management to choose a treatment. Monitoring and reporting come later, and governance is set up first.

  1. Ameasuring and prioritizing the risksCorrect
  2. Bmonitoring and reporting results
  3. Csetting the risk governance structure

Explanation

The process begins with governance and the risk appetite, then identifies risks, then measures them so they can be prioritized and treated. Monitoring comes after risks have been measured and managed, and governance is established before identification.

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