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

The three components that make up the risk assessment phase of the risk management process are?

1. Establishing the context, risk evaluation, and risk treatment

2. Establishing the context, risk identification, and risk evaluation

3. Risk identification, risk analysis, and risk evaluation

4. Risk identification, risk analysis, and risk treatment

The correct answer is: Risk identification, risk analysis, and risk evaluation

The risk assessment phase of the risk management process is fundamentally centered around identifying potential risks, analyzing the likelihood and impact of those risks, and evaluating their significance. The three components identified in the correct choice are critical to this process. Risk identification involves systematically identifying the potential risks that could affect an organization. This ensures that no significant risks are overlooked and that risk managers have a comprehensive view of what they may face. Risk analysis goes deeper by assessing the nature and characteristics of the identified risks. This involves quantifying the likelihood of occurrence and estimating the potential impacts, if those risks materialize. Understanding the interplay of these factors is essential for prioritizing risks and deciding how to respond to them. Finally, risk evaluation involves comparing the results of the risk analysis with established risk criteria to determine the significance of the risks and to prioritize them accordingly. This step helps in making informed decisions about which risks require management attention and what degree of response is necessary. Together, these three components provide a structured approach to understanding and managing risk, ensuring that decision-makers have a clear understanding of the risks they face and can develop appropriate strategies to address them.