What is the primary goal of an effective risk management program?

The primary goal of an effective risk management program is to achieve an acceptable level of risk. This approach emphasizes the importance of balancing risk and reward in decision-making processes within an organization. Rather than seeking to eliminate all risks, which can be impractical and costly, a risk management program focuses on identifying potential risks, assessing their impact, and implementing strategies to mitigate them to a level that the organization can tolerate.

Acceptable risk varies from one organization to another and is influenced by factors such as business objectives, regulatory requirements, and resource availability. An effective program allows organizations to maintain operations, pursue opportunities, and make informed decisions that align with their risk appetite.

Focusing solely on compliance with regulations or eliminating all risks would overlook the broader context of organizational strategy and operational resilience. While regulations are important, and managing risks is crucial for profitability, the essence of a robust risk management program specifically lies in achieving a balance that ensures the organization's sustainability and growth.