Which factor BEST demonstrates that a risk management practice is successful?

The factor that best demonstrates a successful risk management practice is when residual risk is acceptable. In risk management, the aim is not to eliminate all risks but rather to identify, assess, and mitigate them to a level that aligns with the organization's risk appetite and tolerance. Accepting residual risk indicates that the organization has effectively managed its risks to a point where the remaining risks are considered manageable and within acceptable limits, allowing the business to operate with confidence.

Successful risk management involves continuous monitoring and improvement. It requires the organization to strike a balance between risk reduction efforts and resource allocation. When residual risk is deemed acceptable, it shows that the organization has a clear understanding of its risk landscape and has taken appropriate measures to ensure that any leftover risks do not pose a threat to its objectives.

Other options, such as business expansion, insurance procurement, or the elimination of all risks, do not serve as definitive indicators of successful risk management. Expansion might occur due to various factors unrelated to risk practices, obtaining insurance does not eliminate risk but merely transfers it, and aiming for total risk elimination could lead to excessive costs and inefficiencies. Ultimately, recognizing and accepting an appropriate level of residual risk reflects a mature and effective approach to risk management, aligning with organizational goals.