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CISM Practice Question: A financial institution is restructuring its…
A financial institution is restructuring its information security governance to comply with a new regulatory requirement that mandates a formal risk appetite statement. The board has conflicting views on the level of risk to accept. Which of the following should the information security manager do to facilitate the definition of risk appetite?
⚠ Common exam trap
Watch out — candidates often choose a technical or quantitative approach (Option D) or a shortcut (Option C), failing to recognize that risk appetite definition is a governance process requiring board-level strategic alignment, not a technical or delegated decision.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Facilitate a workshop with business leaders to map risk tolerance to strategic goals.
Risk appetite must be aligned with the organization's strategic objectives and business goals, not dictated by external benchmarks or technology metrics alone. Facilitating a workshop with business leaders ensures that risk tolerance is mapped to strategic goals, which is a governance requirement under frameworks like COBIT and ISO 31000. This collaborative approach directly addresses the board's conflicting views by enabling informed, consensus-driven decision-making.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Recommend adopting the risk appetite levels used by a peer financial institution.
Why it's wrong here
Benchmarking can inform but should not dictate the organization's own appetite.
- ✓
Facilitate a workshop with business leaders to map risk tolerance to strategic goals.
Why this is correct
This aligns risk appetite with business strategy and fosters board consensus.
- ✗
Draft a risk appetite statement and ask the CISO to approve it on behalf of the board.
Why it's wrong here
The board must approve the risk appetite; the CISO cannot assume that role.
- ✗
Propose a quantitative risk appetite based on the organization's technology risk metrics.
Why it's wrong here
Risk appetite must consider all business risks, not just technology.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This CISM practice question is part of Courseiva's free ISACA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CISM exam.