What is the most effective practice for boards regarding their organization's risk mitigation efforts?

The most effective practice for boards regarding their organization's risk mitigation efforts is regularly verifying that management's risk mitigation efforts have been successful. This approach ensures that the board actively engages with management to assess the effectiveness of the strategies implemented to mitigate risks. By doing so, the board can identify any potential gaps in the risk management framework, facilitate timely adjustments, and ensure alignment with the organization’s overall objectives.

Regular verification promotes accountability, encourages a culture of risk awareness within the organization, and enhances communication between the board and management regarding risk issues. It allows the board to stay informed about emerging risks and the effectiveness of the measures taken to address them, ultimately enabling more informed decision-making.

Other options, while they may have some merits, do not provide the same level of proactive involvement and oversight that is critical for effective risk management. For instance, simply reviewing success quarterly may not provide the ongoing insights needed to ensure risk management strategies remain effective. Discussing risk after it occurs reflects a reactive rather than proactive approach, potentially resulting in significant negative impacts. Relying solely on external advisors for risk management overlooks the essential internal knowledge and context that management possesses, which is vital for effective risk strategy implementation.