Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 173

Due to extreme liquid fuel price fluctuations, management decided to designate a specific price below which liquid fuel shall not be sold to customers, but instead shall be pumped into storage tanks. Which of the following risk responses has management selected?

Answer options

• A. Risk reduction.
• B. Risk transfer.
• C. Risk acceptance.
• D. Risk avoidance.

Correct answer: C

Explanation

The correct answer is C, Risk acceptance, because management is acknowledging the risk of fuel price fluctuations and deciding to accept it by setting a minimum price rather than eliminating the risk entirely. Options A, B, and D do not apply here as they suggest reducing the risk, transferring it to another party, or avoiding it altogether, which are not the strategies being implemented in this scenario.