The CEO of QVB Holdings, a large diversified conglomerate, is keen to enhance shareholder value using an enterprise risk management framework. You are asked to assist senior management in quantifying and managing the risk-return trade-off for the entire firm. Specifically, the CEO wants to know which risks to retain and which risks to lay off and how to decentralize the companys risk-return trade-off decisions. Which of the following statements is/are correct? I : Management should retain strategic and business risks in which the company has a comparative advantage but diversify risks that can be hedged inexpensively through the capital markets. II : When proposing new projects, business unit managers must evaluate all major risks in the context of the projects marginal impact on the firms total risk.

Group of answer choices

A) Statement I only

B) Statement II only

C) Both statements are incorrect

D) Both statements are correct