ACCA Strategic Business Leader (SBL) Practice Exam

Why is the TARA model critical for businesses?

1. It defines corporate strategy

2. It helps manage organizational change

3. It assists in risk management

4. It evaluates market attractiveness

The correct answer is: It assists in risk management

The TARA model is critical for businesses primarily because it assists in risk management. The model comprises four components: Transfer, Accept, Reduce, and Avoid, which provide a structured approach for organizations to identify, assess, and respond to risks effectively. By utilizing this framework, businesses can evaluate potential risks associated with their operations and strategies, enabling them to make informed decisions that mitigate negative impacts. This proactive approach not only safeguards the organization’s assets and reputation but also supports strategic planning and operational efficiency. In the context of the other options, while defining corporate strategy, managing organizational change, or evaluating market attractiveness are essential business considerations, they do not specifically address the core function of the TARA model. The model’s explicit focus on the various methods of handling risks distinguishes it as a vital tool in the overall strategy and operation of a business, making risk management its most critical function.