Which statement is true?

A. The principles underlying portfolio risk management are generally not applicable to the risk management of non-financial institutions.
B. Risk identification and measurement includes the qualitative assessment of all potential sources of risk.
C. Risk management is not an offensive weapon because management should try to avoid risks instead of undertaking risks.

Correct Answer: B

The principles underlying portfolio risk management are generally applicable to the risk management of non-financial institutions.

Risk identification and measurement includes the quantitative AND qualitative assessment of all potential sources of risk and risk exposure.

Although it is often viewed as defensive, risk management is also a valuable offensive weapon.