Risk and Insurance Management Society (RIMS) Certified Risk Management Professional (CRMP) Practice Exam

A risk management professional evaluates which type of key external force to gain insight about another company's strengths and weaknesses?

1. Political

2. Competitive

3. Economic

4. Technological

The correct answer is: Competitive

Evaluating competitive forces is crucial for a risk management professional seeking insight into another company's strengths and weaknesses. The competitive landscape provides valuable information about how other firms operate, their market positioning, their products and services, and how they respond to market changes. Understanding competitors allows an organization to benchmark its own performance, identify potential threats, and spot opportunities for improvement or innovation. This assessment is essential for strategic planning and risk management. In contrast, political, economic, and technological forces play important roles in shaping the business environment but focus more on the broader context rather than direct comparisons of strengths and weaknesses between specific companies. Political forces can impact regulatory conditions, economic forces relate to market stability and consumer behavior, and technological forces pertain to advancements and disruptions in innovation. While these factors are relevant, they do not directly provide insights about a competitor's capabilities or vulnerabilities in the same targeted way as evaluating competitive forces does.