The effectiveness of risk response options is the best criteria when selecting a risk response, because it reflects the degree to which the response can reduce the impact or likelihood of the risk, or enhance the benefit or opportunity of the risk. The effectiveness of risk response options can be evaluated by considering factors such as cost, feasibility, timeliness, and alignment with the organization's objectives and risk appetite. The other options are not as good as the effectiveness of risk response options, because they do not measure the outcome or value of the response, but rather focus on the input or process of the response, as explained below:
A). Capability to implement the response is a criteria that considers the availability and adequacy of the resources, skills, and knowledge required to execute the response. While this is an important factor to consider, it does not indicate how well the response can address the risk or achieve the desired result.
B). Importance of IT risk within the enterprise is a criteria that considers the significance and priority of the risk in relation to the organization's strategy, objectives, and operations. Whilethis is an important factor to consider, it does not indicate how well the response can address the risk or achieve the desired result.
D). Alignment of response to industry standards is a criteria that considers the compliance and conformity of the response with the best practices, norms, and expectations of the industry or sector. While this is an important factor to consider, it does not indicate how well the response can address the risk or achieve the desired result. References = Risk and Information Systems Control Study Manual, Chapter 2, Section 2.2.2, page 40. How to Select Your Risk Responses -Rebel's Guide to Project Management, Risk Response Plan in Project Management: Key Strategies & Tips, Risk Responses - options for managing risk - Stakeholdermap.
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Detailed Explanation:The impact to business objectives is paramount when developing risk scenarios, as the primary purpose of risk management is to protect and support business objectives. Understanding the impact helps tailor scenarios to potential risks that could disrupt key operations or strategic goals.

Biometric systems are preventive controls designed to restrict access to authorized personnel only, thereby proactively mitigating unauthorized access risks. This aligns withAccess and Authentication Controlprinciples in risk management.

The risk practitioner's next step after learning of an incident that has affected a competitor is to develop risk scenarios, as it involves identifying and describing the potential sources, events, impacts, and responses of the risk that may affect the organization in a similar way as the competitor, and assessing the likelihood and magnitude of the risk. Activating the incident response plan, implementing compensating controls, and updating the risk register are not the next steps, as they are more related to the reaction, mitigation, or reporting of the risk, respectively, rather than the identification and assessment of the risk. References = CRISC Review Manual, 7th Edition, page 100.

The risk practitioner should report that the associated risk has been deferred, as this means that the risk response has been postponed or delayed due to lack of resources or other constraints. Deferring a risk response implies that the risk owner acknowledges the risk and intends to implement the risk mitigation action plan at a later stage, when the resources or conditions are available. The other options are not correct, as they do not reflect the actual status of the risk response. Mitigating a risk means that the risk response has been implemented and the risk level has been reduced. Accepting a risk means that the risk response has been rejected or waived, and the risk level has been accepted as it is. Avoiding a risk means that the risk response has been implemented and the risk level has been eliminated or transferred. References = Risk and Information Systems Control Study Manual, Chapter 4: Risk Response, page 146.