Explanation/Reference:
Explanation:
The risk response process is triggered when a risk exceeds the enterprise's risk tolerance level. The acceptable variation relative to the achievement of an objective is termed as risk tolerance. In other words, risk tolerance is the acceptable deviation from the level set by the risk appetite and business objectives.
Risk tolerance is defined at the enterprise level by the board and clearly communicated to all stakeholders.
A process should be in place to review and approve any exceptions to such standards.
Incorrect Answers:
A, C: Risk appetite level is not relevant in triggering of risk response process. Risk appetite is the amount of risk a company or other entity is willing to accept in pursuit of its mission. This is the responsibility of the board to decide risk appetite of an enterprise. When considering the risk appetite levels for the enterprise, the following two major factors should be taken into account:
The enterprise's objective capacity to absorb loss, e.g., financial loss, reputation damage, etc.

The culture towards risk taking-cautious or aggressive. In other words, the amount of loss the

enterprise wants to accept in pursue of its objective fulfillment.
D: Risk response process is triggered when the risk level increases the risk tolerance level of the enterprise, and not when it just equates the risk tolerance level.

Section: Volume C
Explanation
Explanation:
Residual risk can be used by management to determine:
* Which areas require more control Whether the benefits of such controls outweigh the costs
* As residual risk is the output that comes after applying appropriate controls, so it can also estimate the area which need more sophisticated control. If the cost of control is large that its benefits then no control is applied, hence residual risk can determine benefits of these controls over cost.
Incorrect Answers:
A: Status of enterprise's risk can be determined only after risk monitoring.
B: Appropriate control can only be determined as the result of risk assessment, not through residual risk.

Section: Volume D