ACCA Strategic Business Leader (SBL) Practice Exam

What is emphasized in effective risk management?

1. Only periodic financial assessments.

2. Long-term strategic oversight and communication.

3. Internal team assessments without any external feedback.

4. Regularly scheduled audits and checks.

The correct answer is: Long-term strategic oversight and communication.

Effective risk management emphasizes long-term strategic oversight and communication, as this approach ensures that an organization not only identifies and assesses potential risks but also integrates risk management into its overall strategic objectives. By fostering continuous communication about risks among all stakeholders, organizations can adapt their strategies to address emerging challenges promptly and effectively. Long-term strategic oversight means that organizations are proactive rather than reactive. They anticipate future risks and implications of their decisions rather than only addressing issues as they arise. Communication facilitates a culture of risk awareness, allowing all team members to understand their roles in the risk management process and encouraging collaboration in developing solutions. The other options do not capture the holistic nature of effective risk management. Periodic financial assessments can provide insights but lack the strategic depth and continuous communication necessary for comprehensive risk management. Relying solely on internal team assessments without external feedback limits the perspective on potential risks and trends outside the organization. While regular audits and checks are important for compliance and operational control, they may not encompass the broader strategic considerations that effective risk management requires.