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

What is the strategic discipline that manages the combined impact of risks across an organization?

1. Risk management

2. Enterprise risk management

3. Compliance management

4. Performance management

The correct answer is: Enterprise risk management

The strategic discipline that manages the combined impact of risks across an organization is enterprise risk management (ERM). This approach encompasses identifying, assessing, and prioritizing risks in a holistic manner, considering both internal and external risk factors that could potentially affect the organization’s ability to achieve its objectives. ERM is designed to provide a framework for risk management that integrates with the organization’s overall strategy, allowing for a more coordinated and comprehensive approach to managing risks. In contrast, risk management might focus on specific, individual risks without necessarily integrating them into a broader organizational context. Compliance management is primarily concerned with adhering to laws and regulations rather than the strategic oversight of risk. Performance management focuses on evaluating and improving an organization’s performance metrics, which might involve risk considerations but does not primarily aim at the systemic management of risks. Therefore, the definition and purpose of enterprise risk management situate it as the most appropriate choice for managing the combined impact of risks across an organization.