hardMultiple Choice
CISM Practice Question: After a merger, the combined organization has two…
After a merger, the combined organization has two different risk tolerance levels: one entity is risk-averse, the other is risk-taking. What is the best governance action?
⚠ Common exam trap
Many candidates assume the more conservative risk tolerance is always safer, but CISM emphasizes that risk governance must be based on a deliberate reassessment of the new entity's combined risk appetite, not a simple default to the lowest common denominator.
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
✓
Reassess risk appetite and approve a single unified statement
After a merger, maintaining two separate risk tolerance levels creates governance fragmentation and prevents a unified security posture. The correct action is to reassess the combined organization's risk appetite and approve a single unified statement, as this aligns with the CISM principle that risk governance must be cohesive across the entire enterprise. This ensures consistent risk management decisions, resource allocation, and policy enforcement, avoiding conflicts that could lead to security gaps or regulatory non-compliance.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Adopt the less restrictive risk tolerance
Why it's wrong here
Adopting the less restrictive tolerance exposes the risk-averse entity's assets to exposures its governance rejected, and no single merged appetite is established. It is tempting because harmonising on one enterprise-wide tolerance is the goal, but that tolerance must be set by the board, not inherited from the permissive legacy side.
- ✗
Maintain separate risk tolerance levels for each legacy entity
Why it's wrong here
Perpetuating two tolerances leaves the merged entity without a single board-approved appetite, so capital and controls cannot be allocated consistently. It is tempting because preserving legacy autonomy eases integration, yet separate tolerances suit only a holding company that deliberately operates its subsidiaries independently.
- ✗
Adopt the more conservative risk tolerance across the board
Why it's wrong here
Uniformly imposing the conservative tolerance ignores the risk-taking entity's business model, potentially suppressing returns the merger was meant to capture. It is tempting because conservative settings appear prudent, but a single appetite should reflect the combined strategy rather than one legacy entity's posture.
- ✓
Reassess risk appetite and approve a single unified statement
Why this is correct
Two conflicting tolerance levels cannot coexist under one governance framework, so the board must reassess and approve a single unified risk appetite statement. This resolves the divergence and gives both merged entities one authoritative benchmark for consistent risk decisions.
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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.