Which of the following is a benefit of effective risk management?

Effective risk management is essential for organizations as it helps to identify, assess, and mitigate risks that could hinder operations and performance. One of the key benefits of effective risk management is greater shareholder confidence. When a company is perceived to manage risks well, it fosters trust among investors and stakeholders, who feel more secure about the organization's stability and potential for growth. This confidence can lead to a more favorable view of the company in the market, potentially resulting in increased investments and a stronger reputation.

In contrast, other options reflect negative outcomes or implications. Increased operational costs do not align with the goals of risk management, which typically seeks to optimize costs while safeguarding the organization. Improved losses through negligence is counterproductive; effective risk management aims to reduce these losses, not enhance them. Similarly, reduced competitiveness is contrary to the intent of risk management, as properly managing risks can lead to a stronger competitive position in the market. Thus, the correct option highlights a crucial advantage of implementing effective risk management practices.