Which of the following is a step in Risk Management?

A contingency plan is an essential component of risk management. It refers to a predefined approach that an organization puts in place to deal with potential unforeseen events or crises that could impact their operations. Developing a contingency plan involves identifying potential risks and creating strategies to minimize their impact, ensuring that the organization can respond effectively in the face of challenges.

This proactive measure is vital as it allows businesses to mitigate risks before they escalate into larger issues. By having a well-thought-out contingency plan, an organization can maintain continuity, protect its resources, and ultimately safeguard its reputation and financial stability.

While other elements like corrective action plans and cost budgets play important roles in risk management, they focus more on addressing issues after they have occurred (in the case of corrective actions) or planning financial resources (in the case of budgeting), rather than anticipating and preparing for potential risks beforehand. Thus, the contingency plan stands out as a direct action-oriented step specifically aimed at managing risks proactively.