Question

An organization needs to prioritize spending for its risk management initiatives. Which is the first step the HR leader should take?

Establishing senior management's risk tolerance level compared to their risk appetite
Identifying processes and individuals critical to the organization's delivery of value
Directing every function in the organization to complete risk assessment forms
Comparing the costs of mitigating risks with the costs of transferring risks

Answer 1

The HR leader should first establish the senior management's risk tolerance before considering other risk management steps. This aligns with organizational objectives and sets the foundation for further risk management actions.

Step-by-step explanation:

The first step an HR leader should take in prioritizing spending for risk management initiatives is establishing senior management's risk tolerance level compared to their risk appetite. This helps in aligning the risk management strategies with the organizational objectives and sets the foundation for further actions in the risk management process. Identifying critical processes and individuals, directing functions to complete risk assessments, and comparing the costs of mitigating versus transferring risks are subsequent steps that should follow once the tolerance levels are understood.