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

Which situation is the best reason to revise a risk management program?

1. A new exposure arises such as a new merger or acquisition

2. Significant turnover within the risk management function

3. New product offerings by the insurance industry

4. A revision of a company's annual earnings forecast

The correct answer is: A new exposure arises such as a new merger or acquisition

Revising a risk management program is crucial when new exposures arise, such as through a merger or acquisition. This situation typically introduces a range of new risks that were not previously accounted for in the existing risk management strategy. Mergers and acquisitions often lead to changes in operational processes, business environments, and regulatory obligations, all of which can significantly alter the risk landscape of an organization. It becomes essential for the risk management program to adapt to these changes to ensure it adequately addresses the new risks and integrates them into the overall strategy. In contrast, significant turnover within the risk management function may affect the implementation of the program, but it does not directly create new risks that necessitate a comprehensive revision. Similarly, while new product offerings by the insurance industry could influence the options available for risk transfer or management, they do not inherently require a full revamp of the existing risk management programs unless they directly impact the business. Lastly, a revision of a company’s annual earnings forecast relates more to financial management than to the fundamental risks the organization faces, and does not necessarily demand a revision of the entire risk management program.