(ISC)2 Certified in Cybersecurity Practice Exam

Which term is used to describe the estimate of the maximum risk an organization is willing to accept?

1. Risk Tolerance

2. Risk Transference

3. Risk Avoidance

4. Risk Appetite

The correct answer is: Risk Tolerance

The term that describes the estimate of the maximum risk an organization is willing to accept is known as "Risk Appetite." This concept captures an organization's overall stance towards risk-taking in pursuit of its objectives. Risk appetite encompasses the levels of risk that are acceptable in terms of potential losses or negative outcomes against the backdrop of potential rewards. Organizations often define their risk appetite in conjunction with their business strategy and operational goals. It serves as a guiding principle for decision-making processes and helps in determining how much risk they are willing to accept when pursuing new opportunities. By establishing a clear risk appetite, organizations can also better align their risk management practices with their strategic objectives. Risk Tolerance, while related, refers to the specific amount of risk an organization can handle, often at a more granular level compared to risk appetite. It focuses more on thresholds for specific risks rather than the broader view that risk appetite provides.