Principles of Risk Management

ABD.

The International Organization for Standardization (ISO) identifies the following principles of risk management.

Risk management should: -> create value -> be an integral part of organizational processes -> be part of decision making -> explicitly address uncertainty -> be systematic and structured -> be based on the best available information -> be tailored -> take into account human factors -> be transparent and inclusive -> be dynamic, iterative, and responsive to change be capable of continual improvement and enhancement.

The principles of risk management are fundamental concepts that guide the process of managing risks in an organization. These principles ensure that risk management is integrated into the organization's operations and decision-making processes.

The three correct principles of risk management are:

A. Risk management should be an integral part of the organization: This principle emphasizes that risk management should be integrated into the organization's culture and processes. It should be a part of the organization's strategic planning, policies, and procedures. By doing so, the organization can identify and manage risks more effectively and efficiently.

B. Risk management should be a part of decision-making: This principle asserts that risk management should be incorporated into the organization's decision-making processes. Risks should be identified and assessed before making any important decisions. This helps the organization to make informed decisions and avoid taking unnecessary risks.

D. Risk management should be transparent and inclusive: This principle highlights the importance of transparency and inclusiveness in the risk management process. It is essential to involve all stakeholders in the risk management process, including employees, customers, partners, and regulators. By doing so, the organization can ensure that all perspectives are considered, and the risk management process is fair and unbiased.

C. Risk management is the responsibility of executive management: This principle states that executive management is responsible for ensuring that the organization has an effective risk management process in place. However, this principle is not one of the correct answers, as it is only partially correct. While executive management has a critical role to play in risk management, risk management is the responsibility of everyone in the organization, and each individual has a role to play in identifying, assessing, and managing risks.