A proposed Northstar expansion could produce substantial
growth but may also expose the group to exchange-rate losses. A director argues
that the opportunity is not a risk because risk refers only to adverse events. Required: Which response is MOST accurate?

Question

A proposed Northstar expansion could produce substantial
growth but may also expose the group to exchange-rate losses. A director argues
that the opportunity is not a risk because risk refers only to adverse events.  Required: Which response is MOST accurate?

Accepted Answer

Risk includes  the positive or
negative effect of uncertainty on objectives, so both opportunity and adverse
exposure are relevant.

Answer

The director is correct unless the potential loss can be measured in monetary terms.

Answer

Risk exists only after an uncertain event has occurred and affected reported results.

Answer

The director  is correct because opportunities are considered
strategy, not risk.

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A proposed Northstar expansion could produce substantial growth but may also ex...

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