Exercise 3 Match up the numbered ERM concepts on the left with the lettered descriptions on the right and record your answers in the table below (see next page). There is not a one-to-one correspondence. A. Provides aggregate information at the enterprise level, which supports the primary function of ERM. 1. Risk limit 2. Soft limit B. Should be allocated or budgeted downward to determine risk limits. 3. Hard limit 4. Enterprise risk exposure C. Prevents excessive risk concentration, such as in one particular business segment, geographic area, or type of risk. 5. Risk appetite D. It's a decision. E. Threshold that should rarely, if ever, be crossed. F. Has to be managed to within risk appetite. G. Enterprise risk exposure is typically above this limit. H. It's a calculation. 1. Threshold that can be temporarily crossed. Number Letters That Correspond 1 N 3 4 5