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

What should be included in a risk management policy?

1. Specific financial targets only

2. A clear framework for risk assessment

3. Only regulatory requirements

4. Employee complaints process

The correct answer is: A clear framework for risk assessment

A risk management policy plays a crucial role in guiding an organization’s approach to identifying and managing risks. The inclusion of a clear framework for risk assessment is essential because this framework serves as a structured method for identifying potential threats, evaluating their likelihood and impact, and determining appropriate responses. By clearly outlining roles, responsibilities, and methodologies for assessing risks, a framework ensures that risk management efforts are systematic, consistent, and transparent across the organization. In contrast, focusing solely on specific financial targets or only on regulatory requirements would create a limited scope that neglects the broader aspects of risk management. While financial targets are important, they are just one dimension of risk management, which should encompass various types of risks (operational, reputational, strategic, etc.). Regulatory requirements are foundational, but they alone do not provide a comprehensive strategy for managing risks effectively. Incorporating an employee complaints process is also valuable for addressing internal concerns, but it is not a central element of a risk management policy compared to a robust framework for assessing and managing risks.