What is the third step in the Risk Management Process?

What is the third step in the Risk Management Process?

• A. Select the appropriate combination of techniques for treating and loss exposures, ie risk control and risk financing
• B. Identify loss exposure
• C. Implement and monitor the risk management program
• D. Surpvise and Evaluate

Answer: (A)

In risk management, after you’ve identified what loss exposures exist, you move on to deciding how to handle them. The third step is selecting the techniques to treat loss exposures, which means choosing the mix of risk control measures (to reduce the chance or severity of losses) and risk financing methods (to pay for losses when they occur, such as insurance or retention). This is the point where you tailor a plan for how to address each exposure rather than just spotting what could happen. So why this fits best: it comes after identifying exposures but before implementing the plan. Implementing and monitoring the program happens next, and supervising and evaluating is a later step to check effectiveness. Identifying loss exposure is the first step, not the third.

In risk management, after you’ve identified what loss exposures exist, you move on to deciding how to handle them. The third step is selecting the techniques to treat loss exposures, which means choosing the mix of risk control measures (to reduce the chance or severity of losses) and risk financing methods (to pay for losses when they occur, such as insurance or retention). This is the point where you tailor a plan for how to address each exposure rather than just spotting what could happen.

So why this fits best: it comes after identifying exposures but before implementing the plan. Implementing and monitoring the program happens next, and supervising and evaluating is a later step to check effectiveness. Identifying loss exposure is the first step, not the third.