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

What is typically the first step in a risk management process?

1. Implementation of risk treatments

2. Risk identification

3. Risk evaluation

4. Risk monitoring

The correct answer is: Risk identification

The first step in a risk management process is risk identification. This step is crucial because it involves recognizing and defining potential risks that could impact an organization’s objectives. By identifying risks early on, organizations can understand what threats or opportunities they face, which sets the foundation for the entire risk management process. Once risks are identified, a thorough understanding allows for the development of appropriate strategies for managing them. Effective risk identification enables organizations to create a comprehensive risk register, categorize risks, and prioritize which risks need to be addressed based on their potential impact and likelihood of occurrence. This proactive approach ensures that subsequent steps—such as risk assessment, treatment, evaluation, and monitoring—can be implemented more effectively and efficiently later in the process. In contrast, other processes such as implementation of risk treatments or risk evaluation cannot occur until risks have first been identified. Without understanding what risks are present, it would not be possible to determine appropriate treatments, or to evaluate and monitor those risks appropriately. This illustrates the critical role that risk identification plays in the overall risk management framework.