Which of the following is a key step in the risk management process?

Identifying and evaluating risks is a fundamental step in the risk management process because it lays the groundwork for understanding potential threats and vulnerabilities that an organization may face. This step involves systematically identifying various risks that could impact the organization's assets, operations, and overall objectives. By evaluating these risks, organizations can assess their likelihood and potential impact, thereby enabling informed decision-making regarding risk mitigation strategies. Understanding the context and nature of these risks is crucial for developing effective risk management policies that align with business goals.

The significance of this step cannot be overstated, as it serves not only as the starting point but also influences subsequent actions in the risk management framework, such as risk treatment, monitoring, and communication. This process is ongoing and ensures that organizations stay aware of new or changing risks over time.

The other options do not fit well within the established risk management framework. For example, establishing a reward system for risk-takers does not align with the main objectives of risk management, which focus on identification, analysis, and mitigation rather than incentivizing risky behavior. Reducing all risks to zero is also unrealistic and impractical, as organizations must acknowledge that some level of risk is inherent in all operations and strive instead for manageable and acceptable risk levels. Lastly, ignoring low-prob