Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 106

What is the primary risk associated with an organization adopting a decentralized structure?

Answer options

• A. Inability to adapt
• B. Greater costs of control function
• C. Inconsistency in decision making
• D. Lack of resilience

Correct answer: C

Explanation

The primary risk of a decentralized structure is inconsistency in decision making, as different departments or teams may make decisions that are not aligned with the organization's overall goals. This can lead to fragmented strategies and confusion. The other options, while potential concerns, do not directly address the core issue of varying decisions across the organization.