Which factor is essential for creating an effective risk management culture?

An effective risk management culture is heavily dependent on active engagement and communication among all levels of employees. When employees at all tiers are engaged, they are more likely to understand the importance of risk management and contribute to identifying and mitigating risks. This culture fosters open dialogue where risks can be discussed, and ideas for improvement can be shared, leading to a more proactive approach to managing risks.

Engagement ensures that everyone feels responsible for the organization's risk management efforts, thereby embedding risk awareness into the daily operations and decision-making processes. This collaboration not only helps in identifying potential risks early but also enhances compliance with established risk management policies, making the organization more resilient.

Other options suggest strategies that are either reactive (such as relying solely on audits or implementing disciplinary actions) or detrimental to the stability of the risk management function (like high turnover rates), which could undermine the development of a cohesive risk management culture.