ACCA Strategic Business Leader (SBL) Practice Exam

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Which of the following best describes the purpose of the risk management committee?

To ensure profitability of business strategies
To evaluate employee performance
To communicate risks for informed decision-making
To manage day-to-day operational risks

The correct answer is: To communicate risks for informed decision-making

The purpose of the risk management committee centers on its role in communicating risks to enable informed decision-making. This entails identifying, assessing, and prioritizing risks that could potentially impact the organization. By facilitating discussions around these risks, the committee helps ensure that management and stakeholders have a clear understanding of the challenges the organization faces. This informed perspective is crucial for strategic planning and resource allocation, allowing the organization to proactively address potential threats and seize opportunities. While other functions such as profitability assessment, employee performance evaluation, and day-to-day operational risk management are important in a broader organizational context, they do not encapsulate the specific mandate of the risk management committee. This committee's unique focus is on providing a comprehensive view of risks to support strategic and operational decisions, making the option reflecting this function the most accurate.