Final Answer:
The 5-step process is proven impractical and ineffective during the C). Extreme Risk Level.
Step-by-step explanation:
In the field of Operational Risk Management (ORM), the 5-step process becomes impractical and ineffective when dealing with extreme risk levels. Extreme risks are characterized by their potential to cause catastrophic consequences, leading to severe harm or significant damage. The 5-step ORM process involves identification, assessment, decision-making, implementation, and monitoring. However, when facing extreme risks, traditional methods may fall short due to the unprecedented nature of these events.
Extreme risks often exhibit complexities that surpass the capabilities of standard risk management procedures. These risks may involve a combination of rare events, high uncertainty, and unpredictable outcomes. In extreme situations, the conventional risk assessment tools may not accurately capture the full spectrum of potential consequences and mitigations. Moreover, the urgency and critical nature of extreme risks may demand immediate action, leaving insufficient time for a comprehensive 5-step process.
For example, in scenarios of natural disasters or large-scale emergencies, the immediate priority is to ensure the safety of individuals and minimize damage. The time-sensitive nature of such events requires rapid decision-making and implementation of measures, making the step-by-step approach impractical. In these extreme cases, organizations may need to rely on predefined emergency response plans and improvisation rather than strictly adhering to the structured 5-step ORM process.