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

Which risk management approach aims to address all types of risks in a cohesive manner?

1. Integrated risk management

2. Strategic risk management

3. Enterprise risk management

4. Operational risk management

The correct answer is: Enterprise risk management

Enterprise risk management (ERM) is designed to provide a holistic framework for identifying, assessing, and managing all types of risks that an organization might face, ensuring that risks are considered at a strategic level across the entire enterprise. This approach integrates risk management into the overall business strategy, allowing organizations to align their risk tolerance with their objectives and mitigate potential threats proactively. ERM emphasizes the importance of viewing risks collectively rather than in isolation, recognizing that various types of risks—financial, operational, strategic, compliance—can interconnect and influence one another. This comprehensive perspective enables organizations to enhance decision-making, optimize resources, and improve resilience against uncertainties. While integrated risk management and strategic risk management focus on managing risks in a unified way or aligning them with business strategy, respectively, they may not encompass the full range of risks in the same systematic and inclusive manner as enterprise risk management does. Operational risk management, meanwhile, tends to zero in on risks arising from internal processes and operations, thus lacking the broad scope of ERM.