Certified Management Accountant Practice Exam 2025 - Free CMA Practice Questions and Study Guide

The risk management process typically follows a logical sequence designed to systematically identify, evaluate, and manage risks. After determining the specific risks facing an organization, the next critical step is to assess those risks to gauge their potential impact and likelihood. This assessment helps to better understand the nature of the risks, which lays the groundwork for developing appropriate strategies to address them.

Assessing risks involves analyzing both their potential effects on the organization and the probability that they will occur. By quantifying and qualifying the risks, decision-makers can prioritize them, allowing for the formulation of effective risk responses thereafter. Risk assessment ensures that responses are focused on the most significant threats and opportunities.

The subsequent steps in the process could include prioritizing the risks based on their assessed values, followed by formulating specific response strategies and finally monitoring the effectiveness of those responses. This structured approach is essential for effective risk management and helps organizations proactively safeguard their assets and operations.