What is the primary reason for implementing a risk management program?

Implementing a risk management program is primarily about fulfilling management's due diligence responsibilities, which means actively identifying, assessing, and mitigating risks that could impact the organization. This proactive approach ensures that management is aware of potential risks and is taking appropriate steps to manage those risks, thus safeguarding the organization's assets, reputation, and sustainability.

This focus on due diligence is crucial, as it reflects a commitment to responsible governance and accountability within the organization. By actively managing risk, organizations are better positioned to achieve their strategic objectives, enhance decision-making, and maintain stakeholder trust and confidence.

Although compliance with laws may be an outcome of a risk management program, focusing solely on compliance does not fully encompass the broader objectives and strategic importance of proactive risk management. Identifying new markets and reducing operational costs could be secondary benefits or outcomes from managing risks effectively, but they are not the primary purposes of a risk management program. Thus, the core objective centers on due diligence and the comprehensive management of risk.