In risk management, which activity verifies that controls are effectively reducing risk?

• A. Random checks
• B. Wealth assessment
• C. Monitoring effectiveness
• D. Disciplinary actions

Answer: (C)

Monitoring effectiveness verifies that controls are actually reducing risk. It involves continuously tracking how well the controls perform by collecting and analyzing data on relevant indicators—such as incident rates, near-misses, and control failure events—and conducting audits or tests to confirm the controls function as intended. By comparing residual risk to defined risk tolerances, you can determine whether the controls are achieving the desired level of risk reduction and adjust them if necessary. Random checks can help spot issues but don’t provide the ongoing, systematic verification that monitoring effectiveness delivers. Wealth assessment isn’t a risk-control measure, and disciplinary actions address violations after the fact rather than assessing control performance.