Which of the following best describes a characteristic of an effective ORM process?

An effective Operational Risk Management (ORM) process is best characterized by a comprehensive assessment of all types of risks. This holistic approach recognizes that operational risk encompasses a wide range of potential issues beyond just financial compliance, including operational failures, legal risks, technology failures, and external events, among others.

An effective ORM process aims to identify, assess, monitor, and mitigate all operational risks that could impact an organization’s objectives. By focusing on a comprehensive assessment, organizations can better understand their risk landscape and develop tailored strategies to address diverse risks proactively. This not only enhances organizational resilience but also aids in making informed strategic decisions.

The other options highlight limited or narrow approaches that do not align with the comprehensive nature of effective ORM. Focusing solely on financial compliance ignores other critical operational risks that could lead to larger issues. Exclusive reliance on internal audits could result in overlooking other valuable sources of information and risk assessment methods. A limited communication strategy would hinder transparency and collaboration, which are vital for recognizing and managing risks effectively across an organization.