Which statement best describes the relationship between the risk officer and the board of directors?

Having a direct line of communication between the risk officer and the board of directors is crucial for effective risk management within an organization, particularly in the cannabis industry where regulatory compliance and risk assessment are paramount. This direct communication allows the risk officer to present critical information, insights, and recommendations directly to the board, ensuring that decision-makers are fully informed about potential risks and the strategies in place to mitigate them.

This relationship fosters transparency and enables the board to understand the comprehensive risk landscape the organization operates within. In a rapidly evolving industry like cannabis, the ability for the risk officer to communicate directly with the board also supports timely decision-making, which is essential for effective governance and strategic planning. This engagement is part of ensuring that risks are monitored closely and that the organization can respond proactively to challenges.

In contrast, communicating solely through the CEO can dilute the message and potentially create misunderstandings or delays in decision-making. Relying on annual reports may not capture the dynamic nature of risk, especially in an industry affected by changing regulations and market conditions. Not engaging with board members directly limits the risk officer's influence and the board's understanding of risk, which are both detrimental in effectively managing the organization’s risk profile.