Ace the AAT INAC Challenge 2025 – Master Level 4 Accounting Magic!

Question: 1 / 400

What is the objective of a 'risk management framework'?

To eliminate all risks from the organization

To ignore insignificant risks

To identify, assess, and respond to risks

The objective of a 'risk management framework' is to identify, assess, and respond to risks. This systematic approach ensures that organizations can proactively manage potential threats and uncertainties that could impact their operations or objectives. By identifying risks, businesses can understand the challenges they face and evaluate their potential impact and likelihood.

Once risks are assessed, organizations can develop appropriate responses, whether that involves mitigating the risk through controls, transferring it through insurance, accepting it, or avoiding it altogether. The ability to handle risks effectively is crucial for achieving strategic goals and ensuring sustainability in a dynamic environment. This framework is not about eliminating all risks or merely ignoring them; instead, it focuses on informed decision-making regarding how to handle various risks to achieve the organization's objectives.

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To enhance organizational profits

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