Section: Volume A
Explanation
Explanation:
The risk components defined by the COSO ERM are internal environment, objective settings, event identification, risk assessment, risk response, control objectives, information and communication, and monitoring.
Incorrect Answers:
C: Business continuity is not considered as risk component within the ERM framework.

Section: Volume D

Explanation/Reference:
Explanation:
The cost of the response, which is applied so as to reduce risk within tolerance levels, is one of the most important parameter. By considering the cost of response, it is decided whether or not benefits of applying response is greater than accepting the risk; and according to this analysis it is decided whether the certain response should be applied or not. For example, if risk transfer response is applied by using insurance, then cost would be the cost of insurance.
Incorrect Answers:
B: This parameter is considered after analyzing the cost of response, which will further decide the level of sophistication of risk response. The enterprise's capability to implement the response means that if the risk management process is mature then the risk response is more C: This is one of the parameters that is considered but is not as important as considering cost of response.
The importance of the risk is determined by the combination of likelihood and magnitude levels along with its position on the risk map.
D: Efficiency of response can only be analyzed after applying the response. So it is the latter stage in selection of response.

Section: Volume D
Explanation:
Natural disaster can be a long-term or short-term and can have large or small impact on the company.
However, as the natural disasters are unpredictable and infrequent, they are best considered as discontinuous.
Incorrect Answers:
A: Natural disaster can be a short-term, but it is not the best answer.
B: Natural disaster can be a long-term, but it is not the best answer.
D: Natural disaster can be of large impact depending upon its nature, but it is not the best answer.