Which of the following is a benefit of effective risk management?

Effective risk management leads to reduced operational costs as it enables organizations to identify, assess, and mitigate potential risks before they materialize into significant issues. By proactively managing risks, organizations can avoid potential losses, legal fees, and penalties that could arise from risk events. Additionally, effective risk management processes often streamline operations and reduce redundancies, leading to a more efficient allocation of resources. This efficiency translates into lower operational costs, as businesses can operate without the burdens of costly mishaps and interruptions that stem from unmanaged risks.

In contrast, increased risk exposure, shortened audit cycles, and minimized chance of compliance with laws do not represent the benefits of effective risk management. Instead, they highlight situations where risk management is either lacking or ineffective, potentially leading to greater vulnerability, more frequent audits due to compliance issues, and a higher likelihood of legal non-compliance. Effective risk management is focused on minimizing risks rather than exposing the organization to greater threats.