Explanation/Reference:
Explanation:
The business owner of the application needs to understand and accept the residual application risks.

Section: INFORMATION SECURITY GOVERNANCE
Explanation
Explanation:
The steering committee controls the execution of the information security strategy according to the needs of the organization and decides on the project prioritization and the execution plan. The steering committee does not allocate department budgets for business units. While ensuring that regulatory oversight requirements are met could be a consideration, it is not the main reason for the review. Reducing the impact on the business units is a secondary concern but not the main reason for the review.

Information security controls should be designed primarily based on business risk scenarios, because they help to identify and prioritize the most relevant and significant threats and vulnerabilities that may affect the organization's information assets and business objectives. Business risk scenarios are hypothetical situations that describe the possible sources, events, and consequences of a security breach, as well as the likelihood and impact of the occurrence. Business risk scenarios can help to:
* Align the information security controls with the business needs and requirements, and ensure that they support the achievement of the strategic goals and the mission and vision of the organization
* Assess the effectiveness and efficiency of the existing information security controls, and identify the gaps and weaknesses that need to be addressed or improved
* Select and implement the appropriate information security controls that can prevent, detect, or mitigate the risks, and that can provide the optimal level of protection and performance for the information assets
* Evaluate and measure the return on investment and the value proposition of the information security controls, and communicate and justify the rationale and benefits of the controls to the stakeholders and management Information security controls should not be designed primarily based on a business impact analysis (BIA), regulatory requirements, or a vulnerability assessment, because these are secondary or complementary factors that influence the design of the controls, but they do not provide the main basis or criteria for the design. A BIA is a method of estimating and comparing the potential effects of a disruption or a disaster on the critical business functions and processes, in terms of financial, operational, and reputational aspects. A BIA can help to determine the recovery objectives and priorities for the information assets, but it does not identify or address the specific risks and threats that may cause the disruption or the disaster. Regulatory requirements are the legal, contractual, or industry standards and obligations that the organization must comply with regarding information security. Regulatory requirements can help to establish the minimum or baseline level of information security controls that the organization must implement, but they do not reflect the specific or unique needs and challenges of the organization. A vulnerability assessment is a method of identifying and analyzing the weaknesses and flaws in the information systems and assets that may expose them to exploitation or compromise. A vulnerability assessment can help to discover and remediate the existing or potential security issues, but it does not consider the business context or impact of the issues.
References = CISM Review Manual, 16th Edition, ISACA, 2021, pages 119-120, 122-123, 125-126, 129-130.