Evaluating Portfolio Performance Against Benchmark

John is a portfolio manager at ABC Investment Firm. He is reviewing the performance of his investment portfolio over the past year, which has garnered a 12% return. He considers this performance excellent, particularly since the benchmark index returned only 8% during the same period. As part of his analysis, John needs to evaluate whether the portfolio's performance is truly exceptional or if it can be attributed to the portfolio's risk exposure compared to the benchmark.

In the context of performance appraisal, what is the primary aspect that John should consider in order to accurately assess the performance of his portfolio?