Exercise 13-34 Managing Risks Using a Portfolio Perspective Barolo Company manufactures laptop stickers for Italian sports teams. Barolos risk management team has identified the companys 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 companys 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 companys risk appetite. In addition, the team decided to reduce inherent risk 4. Barolos risk graph shown below depicts its portfolio of risks after the team has implemented its risk responses.

Impact IR 4 Required: Refer to Barolos risk graph and match the numbers (0-s) on the graph with the correct let- tered descriptions (A-G). A. Inherent risk 3 (IR,) B. Residual risk 4 (RR) C. Net benefit D. Inherent risk 4 (IR,) E. Likelihood F Board of directors G. Risk appetite Impact IR 4 Required: Refer to Barolos risk graph and match the numbers (0-s) on the graph with the correct let- tered descriptions (A-G). A. Inherent risk 3 (IR,) B. Residual risk 4 (RR) C. Net benefit D. Inherent risk 4 (IR,) E. Likelihood F Board of directors G. Risk appetite