A risk management program must be monitored and periodically revised, and that revision involves four steps. Which of the following is one of those four steps?

A risk management program must be monitored and periodically revised, and that revision involves four steps. Which of the following is one of those four steps?

• A. Establish results-based rather than activity-based standards of acceptable performance.
• B. Compare actual results with the established performance standards.
• C. Reduce any performance standards that have not been achieved by the actual results.
• D. Return to the first step in the risk management process to identify new loss exposures.

Answer: (B)

The revision phase of a risk management program relies on measuring how well the program is performing against predefined expectations. Comparing actual results with established performance standards provides the essential feedback to see whether the objectives are being met and where gaps or deviations exist. This comparison is what signals the need for corrective actions, adjustments to controls or resources, or changes to the standards themselves to keep the program effective. Setting standards and adjusting them downward aren’t part of the revision step itself; those relate to planning and objective setting, and lowering standards isn’t a sound revision practice. Returning to the first step to identify new loss exposures may be necessary if monitoring reveals new risks, but that activity pertains to reidentification of exposures rather than the evaluation and adjustment process of the existing program.

The revision phase of a risk management program relies on measuring how well the program is performing against predefined expectations. Comparing actual results with established performance standards provides the essential feedback to see whether the objectives are being met and where gaps or deviations exist. This comparison is what signals the need for corrective actions, adjustments to controls or resources, or changes to the standards themselves to keep the program effective.

Setting standards and adjusting them downward aren’t part of the revision step itself; those relate to planning and objective setting, and lowering standards isn’t a sound revision practice. Returning to the first step to identify new loss exposures may be necessary if monitoring reveals new risks, but that activity pertains to reidentification of exposures rather than the evaluation and adjustment process of the existing program.