Which of the following best defines 'acceptable risk'?

Acceptable risk refers to the level of risk that an organization is willing to tolerate in pursuit of its objectives, particularly when operational needs necessitate such decisions. In this context, the correct choice highlights that acceptable risks are those deliberately retained because they are deemed necessary for operational functionality. For example, a business might accept certain risks associated with project delays or cost overruns if ensuring project completion is critical to its strategy.

In contrast, the other choices do not accurately capture the essence of acceptable risk. Risks that are fully mitigated (the first choice) mean that no risk remains, which does not align with the concept of tolerance for risk. Risks that cannot be measured (the third choice) are problematic since it is challenging to define an 'acceptable' level if one cannot evaluate it. The concept of all risks that exceed a threshold (the fourth choice) refers to risks outside acceptable limits, rather than those that are accepted for practical reasons. Understanding acceptable risk helps organizations balance risk management with their operational objectives effectively.