ACCA Strategic Business Leader (SBL) Practice Exam

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What does the 'A' in TARA stand for?

Accept
Assess
Actualize
Avoid

The correct answer is: Accept

The 'A' in TARA stands for Accept. In the context of risk management, TARA is an acronym that outlines a framework for how organizations can approach risks. The components of TARA consist of Accept, Transfer, Avoid, and Reduce. Accepting a risk means acknowledging its existence and deciding that the potential impact is tolerable and manageable, allowing the organization to proceed without significant changes or additional mitigation strategies. This approach is often taken when the cost of mitigating the risk exceeds the potential loss, or when the organization has confidence in their ability to manage the risk effectively if it materializes. Understanding the role of 'Accept' within TARA is crucial for effective risk management as it helps organizations balance their risk appetite with their operational capabilities. In a business environment, decisions around accepting risk can significantly influence strategic direction, resource allocation, and overall resilience.