A company's risk threshold is defined as the level of financial loss it is willing to suffer from a risk event before considering the risk unacceptable.
The statement is correct because a risk threshold is a specific point at which an organization will no longer accept a risk. It sets the boundary for the maximum amount of risk the organization is prepared to accept in pursuit of its objectives, often expressed in financial terms, such as the maximum expected financial loss.
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What does 'risk threshold' mean in detail?
How is risk threshold determined?
What is the importance of setting a risk threshold?