Risk response strategy is the approach that an organization takes to address the risks that it faces across its various functions, processes, and activities. Risk response strategy involves selecting and implementing the appropriate risk response options, such as avoidance, mitigation, transfer, or acceptance, for each risk, based on the risk level, the risk appetite, and the cost-benefit analysis1.
The most important consideration for senior management when developing a risk response strategy is the risk appetite of the organization. Risk appetite is the amount and type of risk that an organization is willing to accept in order to achieve its objectives. Risk appetite reflects the organization's risk attitude and its willingness to take on risk in specific scenarios. Risk appetite is usually expressed in a qualitative statement approved by the board of directors2.
Considering the risk appetite of the organization is essential for developing a risk response strategy, because it can help to:
* Align the risk response strategy with the overall business strategy and vision, and ensure that the risk response options support the achievement of the organizational objectives
* Balance the risk response strategy with the expected benefits and opportunities, and ensure that the risk response options do not eliminate or reduce the potential value or performance of the organization
* Enhance the risk response strategy with the stakeholder expectations and requirements, and ensure that the risk response options meet the needs and interests of the customers, suppliers, partners, regulators, and other parties
* Optimize the risk response strategy with the available resources and capabilities, and ensure that the risk response options are feasible and cost-effective for the organization34 The other options are not as important as the risk appetite of the organization for developing a risk response strategy, but rather some of the factors or outcomes of it. Cost of controls is the amount of resources and funds that are required to implement and maintain the risk response controls, such as policies, procedures, or technologies, that aim to prevent or reduce the negative effects of the risks. Cost of controls is a factor that can affect the selection and implementation of the risk response options, but it is not the primary consideration for developing the risk response strategy. Risk tolerance is the acceptable variation in the outcomes related to specific objectives or risks. Risk tolerance is a factor that can measure the risk analysis and guide the risk response, but it is not the primary consideration for developing the risk response strategy. Probability definition is the process of estimating the likelihood or frequency of the risk events, based on historical data, statistical analysis, expert judgment, or other methods. Probability definition is an outcome of the risk analysis that can inform the risk response, but it is not the primary consideration for developing the risk response strategy. References =
* Risk Response - ISACA
* Risk Appetite vs. Risk Tolerance: What is the Difference? - ISACA
* Risk Response Strategies: Types & Examples (+ Free Template)
* Risk Response Strategy - ISACA
* [CRISC Review Manual, 7th Edition]

Section: Volume D
Explanation:
Sensitivity analysis is the quantitative risk analysis technique that:
* Assist in determination of risk factors that have the most potential impact
* Examines the extent to which the uncertainty of each element affects the object under consideration when all other uncertain elements are held at their baseline values Incorrect Answers:
B: Fault tree analysis provides a systematic description of the combination of possible undesirable occurrences in a system. It does not measure the extent of uncertainty.
C: Cause-and-effect analysis involves the use of predictive or diagnostic analytical tool for exploring the root causes or factors that contribute to positive or negative effects or outcomes, and not the extent of uncertainty.
D: Scenario analysis provides ability to see a range of values across several scenarios to identify risk in specific situation. It provides ability to identify those inputs which will provide the greatest level of uncertainty.
But it plays no role in determining the extent of uncertainty.

A key risk indicator (KRI) is a metric that measures the level of risk exposure or the likelihood of a risk event1. A KRI threshold is a predefined value or range that triggers an alert or action when the KRI reaches or exceeds it2. A data leakage incident is an unauthorized or accidental exposure of sensitive or confidential data to external parties3.
When a KRI threshold reaches the alert level, indicating that data leakage incidents are highly probable, the risk practitioner's first course of action should be to review the incident handling procedures. Incident handling procedures are the plans and actions to be taken in the event of a data breach or security incident, such as data leakage4. Reviewing the incident handling procedures can help the risk practitioner to:
* Verify the roles and responsibilities of the incident response team and other stakeholders
* Confirm the communication and escalation channels and protocols
* Identify the tools and resources available for incident detection, containment, analysis, eradication, recovery, and reporting
* Evaluate the readiness and preparedness of the organization to respond to a data leakage incident
* Update or revise the procedures as needed to reflect the current situation and risk level Reviewing the incident handling procedures can help the risk practitioner to ensure that the organization can respond to a data leakage incident effectively and efficiently, minimizing the potential or expected impact on the organization's operations, reputation, or objectives.
The other options are not the first course of action for the risk practitioner, although they may be relevant or necessary at later stages of the risk management process. Updating the KRI threshold, which means adjusting the value or range that triggers an alert or action, may be appropriate if the KRI threshold is too high or too low, but it does not address the imminent risk of data leakage or the response plan. Recommending additional controls, which means suggesting new or improved measures to prevent, detect, or mitigate data leakage, may be useful for reducing the risk exposure or impact, but it does not ensure that the organization is ready or capable to handle a data leakage incident. Performing a root cause analysis, which means finding and identifying the underlying factors that contributed to the risk event, may be helpful for learning from the incident and improving the risk management strategy, but it is usually done after the incident has occurred and resolved, not before.
References = Key Risk Indicators: Definition, Examples, and Best Practices, KRI Framework for Operational Risk Management | Workiva, What is Data Leakage? Definition, Causes, and Prevention, Incident Response Planning: Best Practices for Businesses

In order to efficiently execute a risk response action plan, it is most important for the emergency response team members to understand their defined roles and responsibilities. This can help to ensure that the team members know what they are expected to do, how they should coordinate and communicate with each other, and how they should report the progress and outcome of the risk response. The system architecture in target areas, IT management policies and procedures, and business objectives of the organization are other important factors, but they are not as important as the defined roles and responsibilities. References = ISACA Certified in Risk and Information Systems Control (CRISC) Certification Exam Question and Answers, question 12; CRISC Review Manual, 6th Edition, page 215.