Responsive to Top Management

Since risk is the expected loss to the achievement of an organizations objectives, top management must establish the relative priorities of those objectives.

It might not be obvious, but risk is subjective since the importance of the organization’s objectives, a big component of a risk, is subjective.

The importance of a loss to a short term revenue objective might be more important than loss to the reputation objective for one organization while the loss to reputation would be more important to an organization that relies heavily on its brand, such as Coca Cola.