Which of the following is a potential consequence of not managing risks effectively?

Not managing risks effectively can lead to significant negative outcomes for an organization, with financial losses and reputational damage being two of the most critical consequences. When risks are not identified, assessed, and mitigated, an organization may face unexpected events that can manifest in various ways, such as costly operational disruptions, legal liabilities, or failure to meet customer needs. These situations can result in direct financial losses, such as decreased revenues, increased expenses, or even bankruptcy in severe cases.

Additionally, the reputation of the organization can suffer considerably as stakeholders, including customers, investors, and the public, lose trust in the organization's ability to operate securely and responsibly. This reputational damage often has long-lasting effects, making it difficult for the organization to regain stakeholder confidence and rebuild its brand image, which can also negatively impact future revenues and growth potential.

In contrast, the other options suggest outcomes that are generally associated with effective risk management practices. These outcomes, such as increased operational efficiency, improved stakeholder trust, and enhanced compliance, highlight the positive benefits that effective risk management can yield, emphasizing the importance of a proactive approach in identifying and mitigating risks within an organization.