Hi Riaz,
I think when you do not have to allocate funds for contingency because there is no risk anymore recorded, those funds should undoubtedly be removed from the contingency and there are two possible scenarios:

You may reduce the cost baseline as you said, and return the funds to the organization that may use them for other resources external to the project. You may also allocate them to the management reserve, where they could be used for any unforeseen work that is within the scope of the project. In such a case, the project budget will not change because what was deducted from the contingency reserve is added to the management reserve.

You may keep the cost baseline unchanged, but distribute the funds to the contingency reserves related to the other risks identified.

That is my approach to the question, and I hope it can be helpful.

I'm having trouble finding this answer....

Say that I have a Risk in the Risk Register with an identified risk response and funds in the contingency associated with that risk.

Now say that that risk does not come to pass and I'm sure it is no longer a risk and will not come up in the project again.

I understand the correct thing to do is to release the funds associated with that risk. But I don't understand what exactly that means. Are the funds actually removed from the contingency? And then is the cost baseline actually adjusted as a result of this?

Thanks in advance!