Governance of Enterprise IT (CGEIT) Certification Practice Exam

What does risk optimization in IT governance focus on?

1. Eliminating all risks

2. Balancing risk and reward

3. Transferring risks to third parties

4. Increased spending on security

The correct answer is: Balancing risk and reward

Risk optimization in IT governance is centered around balancing risk and reward. This concept acknowledges that while risks cannot be completely eliminated, they can be managed in a way that maximizes the benefits of IT investments while minimizing potential downsides. By focusing on this balance, organizations can make informed decisions regarding which risks are acceptable based on their potential impact versus the rewards that can be achieved by taking those risks. This approach allows organizations to efficiently allocate resources and pursue opportunities while maintaining an acceptable level of risk exposure. In contrast, attempts to eliminate all risks often lead to overly cautious strategies that can stifle innovation and impede growth. Transferring risks to third parties does shift the burden of risk but does not necessarily address the balance between risk and reward. Moreover, increased spending on security, while important, does not inherently lead to optimized risk management if those expenditures do not align with the organization’s risk appetite and business objectives. Thus, the correct focus on balancing risk and reward provides a strategic framework for effective IT governance.