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

What term describes an individual's or organization's view of potential gains versus the related potential losses?

1. Risk culture

2. Risk attitude

3. Key risk indicator (KRI)

4. Organizational resilience

The correct answer is: Risk attitude

The term that describes an individual's or organization's view of potential gains versus the related potential losses is risk attitude. This concept is crucial as it reflects how stakeholders perceive risk and their willingness to take on or mitigate it based on their assessment of possible outcomes. Risk attitude encompasses the propensity to engage with uncertainty in terms of willingness to accept risks in favor of expected benefits, thereby shaping decision-making processes and strategies within an organization. In contrast, risk culture pertains to the shared values and behaviors surrounding risk management within an organization, while key risk indicators (KRIs) are metrics used to signal potential risks. Organizational resilience, on the other hand, focuses on the ability of an organization to anticipate, prepare for, respond to, and recover from disruptive incidents. Understanding risk attitude is fundamental to developing effective risk management practices and aligning strategic goals with risk considerations.