Which of the following is a characteristic of effective risk management?

Regular evaluation of internal processes and controls is a fundamental characteristic of effective risk management. This practice allows organizations to continuously assess their risk landscape and identify potential vulnerabilities. By regularly reviewing how processes and controls are functioning, organizations can adjust their strategies and implement necessary improvements, thus enhancing their overall risk management framework. This proactive approach ensures that management is aware of changes in the environment that could impact risk levels, enabling timely and informed decision-making.

In contrast, relying solely on external audits can create a false sense of security, as they may not capture all internal risks or dynamic changes over time. Minimizing communication about risks can lead to a lack of awareness among employees, which is essential for a comprehensive risk management culture. Likewise, ignoring past incidents during future planning may result in a recurrence of the same issues, as organizations fail to learn from past experiences and implement preventive measures.