Risk management programs should

Risk management programs should

• A. Operate economically and efficiently.
• B. Incur substantial costs for slight benefits.
• C. Be an autonomous part of the organization.
• D. Not use benchmarking to compare costs.

Answer: (A)

Balancing cost and effectiveness guides risk management programs. They should operate economically and efficiently, delivering necessary risk reduction while using resources prudently. This approach minimizes the total cost of risk and maximizes value to the organization. Spending heavily for only marginal benefits would undermine that objective. Risk management works best when integrated with the broader business rather than run as a separate, autonomous function, allowing cross‑functional collaboration. Benchmarking provides a valuable way to compare costs and results with peers, so avoiding benchmarking would miss an important tool for maintaining efficiency and justifying expenses.

Balancing cost and effectiveness guides risk management programs. They should operate economically and efficiently, delivering necessary risk reduction while using resources prudently. This approach minimizes the total cost of risk and maximizes value to the organization. Spending heavily for only marginal benefits would undermine that objective. Risk management works best when integrated with the broader business rather than run as a separate, autonomous function, allowing cross‑functional collaboration. Benchmarking provides a valuable way to compare costs and results with peers, so avoiding benchmarking would miss an important tool for maintaining efficiency and justifying expenses.