Barolo Company manufactures laptop stickers for Italian sports teams. Barolo's risk management team has identified the company's

Question:

Barolo Company manufactures laptop stickers for Italian sports teams. Barolo's risk management team has identified the company's top five inherent risks and plans to manage them using a typical ERM portfolio perspective (i.e., align the portfolio of residual risks with the company's risk appetite) . Specifically, the team has decided to accept inherent risk 2 (IR2) and inherent risk 3 (IR3) as they approximately offset each other. The team also decided to accept inherent risk 1 (IR1) because it is very close to the company's risk appetite. In addition, the team decided to reduce inherent risk 4. Barolo's risk graph shown below depicts its portfolio of risks after the team has implemented its risk responses.

Required:
Refer to Barolo's risk graph and match the numbers (1-5) on the graph with the correct lettered descriptions (A-G).
1. = ___________
2. = ___________
3. = ___________
4. = ___________
5. = ___________
A. Inherent risk 3 (IR3)
B. Residual risk 4 (RR4)
C. Net benefit
D. Inherent risk 4 (IR4)
E. Likelihood
F. Board of directors
G. Risk appetite

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...