Certified Risk Manager Principles Practice Exam 2025 - Free CRM Practice Questions and Study Guide

The characteristic associated with Traditional Risk Management (TRM) centers on a focus on minimizing risk impact. This approach is primarily reactive, aiming to identify and control risks once they are recognized, with a significant emphasis on reducing the negative effects that risks can have on an organization.

TRM tends to prioritize loss prevention and mitigation strategies, ensuring that, when risks are identified, efforts are made to minimize their potential impact. This can involve strategies such as purchasing insurance, implementing safety measures, or creating contingency plans.

In contrast, proactive risk treatment is more aligned with modern risk management practices, which aim to anticipate and address risks before they manifest. Involvement of all stakeholders and considering both upside and downside risks represent a broader and more integrated approach to risk management, which is characteristic of contemporary frameworks rather than traditional ones. Traditional Risk Management often does not encompass these aspects as comprehensively.