3. In order to put risk management into practice, Crouhy outlines high-level steps in the following order: 1) Risk appetite: Determine the firm's risk appetite which should include the firm's risk and return objectives 2) Mapping: After the objectives have been set, map the relevant risks and estimate their current and future magnitudes 3) Instrument selection: After mapping the risks, identify instruments that can be used to risk- manage the exposures (Some of the instruments can be devised internally; i.e., natural hedges) 4) Strategy: Construct and implement a strategy 5) Evaluation: Periodically evaluate the performance of the risk management system Each of the following is a true statement about some aspect of this process EXCEPT which is false? A. When developing the firm's risk appetite, it is rarely feasible to define an objective in terms of a single, simple formula; rather, the objective should be broken down into clear rules that can be implemented in line with major policy choices such as risk constituents (e.g., shareholders or debtors), time horizon, and accounting versus economic profits B. When mapping the firm's risks, it is important to differentiate between risks that can be insured against, risks that can be hedged, and risks that are noninsurable and nonhedgeable. This classification is important because the next step is to look for instruments that might help to minimize the risk exposure of the firm. C. When implementing a strategy, because FAS 133 and IFRS 9 allow for hedge accounting for any derivative instrument regardless of the economic relationship between the derivative and the hedged item, firm's should prefer mark-to-mark (MtM) derivatives over-the-counter (OTC) derivatives. D. When implementing a strategy, a key tactical decision is whether to employ static or dynamic hedges. A static strategy is relatively easy to implement and monitor. Dynamic strategies involve an ongoing series of trades that are used to calibrate the combined exposure and the derivative position; this dynamic strategy calls for much greater managerial effort in implementing and monitoring the positions, and may incur higher transaction costs