Final answer:
The board-based amount of risk a company or other entity is willing to accept in pursuit of its mission is known as risk appetite.
Step-by-step explanation:
The correct answer is d. Risk appetite. Risk appetite refers to the board-based amount of risk a company or other entity is willing to accept in pursuit of its mission. It is an evaluation of how much risk an organization is willing to take on to achieve its goals.
For example, a technology startup might have a higher risk appetite because it is focused on growth and innovation, while a conservative financial institution might have a lower risk appetite due to concerns about potential losses.
In contrast, risk tolerance (option a) refers to an individual's or organization's ability to withstand losses or setbacks caused by risk. Inherent risk (option b) refers to the level of risk that exists in a process or activity without any controls in place, and residual risk (option c) refers to the remaining risk after controls have been implemented to mitigate the inherent risk.