Why is understanding the context important in risk management?

The correct answer isC. It aligns the risk management process with organizational objectives. ISO 31000 identifiesestablishing the contextas a foundational step in both the risk management framework and the risk management process. Understanding the internal and external context ensures that risk management is tailored to the organization’s purpose, strategy, culture, and operating environment.

By understanding the context, organizations can ensure that risks are identified, analyzed, and treated in a way that supports the achievement of objectives. This alignment prevents risk management from becoming a generic or disconnected activity and ensures that it contributes to value creation and protection.

Option A is incorrect because ISO 31000 does not require identical risk treatment methods across departments; it promotes atailoredapproach. Option B is incorrect because external risks cannot be entirely avoided, only managed. Option D is incorrect because uncertainty is inherent to risk and cannot be eliminated.

From a PECB ISO 31000 Lead Risk Manager perspective, context-setting is essential for relevance, effectiveness, and integration of risk management into decision-making. Therefore, the correct answer isit aligns the risk management process with organizational objectives.