From the course: Introduction to Risk Management

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Responding to risk

Responding to risk

From the course: Introduction to Risk Management

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Responding to risk

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- [Instructor] An enterprise needs to decide on an appropriate response to the risks they have previously identified and assessed. If the risk has a high impact on the bank, the bank may choose to avoid that risk. This response could be appropriate when there is zero risk appetite for it. During COVID-19, many banks and companies and other industries decided to avoid the risk of their employees getting sick by introducing work from home policies. A bank can take steps to reduce either the likelihood or impact of a risk event. If the risk is above a bank's particular risk appetite but still wants to accept some exposure to this risk, reducing risk could be an appropriate response. For example, a bank could use artificial intelligence to scan and analyze internal data to reduce the risk of being a victim of financial fraud and still carry out business in that area. There is still a chance that the bank may be a victim of fraud, but using AI has reduced the risk to a more acceptable…

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