12.1 Risk control strategies

Question 1

This chapter considers how risk can be c_________ in an organisation.

Answer 1

controlled.

Question 2

All organsiations make use of risk control t_____. These tools are used to reduce the probability and i______ of loss events, such as fires, fraud or IT failures.

Answer 2

tools

impact

Question 3

Loss p_________ tools reduce the probability of a loss event by targeting the c_____ of risk events. These are usually linked to the actions or inactions of people, faulures in processes and systems or e_______ events (e.g. weather, politics).

Answer 3

probability
cause
external

Question 4

Loss r__________ tools target the effects of loss events. Loss events may have financial and non-financial effects. In financial terms, they can affect the physical and c___ assets of an organisation. In non-financial terms, organisations may suffer r________ damage and the loss of goodwill.

Answer 4

reduction
cash
reputation

Question 5

In broad terms there are four risk control strategies:

1 t______
2 t_________
3 t_________
4 t________

Answer 5

treat
tolerate
transfer
terminate

Question 6

Risk treatment can be further broken down into a variety of control options. These include formal and informal controls, p_________, corrective, detective, and d________ controls.

Answer 6

preventative

directive

Question 7

Any organisation will use a wide range of risk financing mechanisms to help fund the financial consequences of loss events. Loss events can be very e__________ to recover from. Assets may need to be repaired or r_________. There may also be clean-up costs, c_____________ payments, fines and liability claims.

Answer 7

expensive
replaced
compensation

Question 8

R__________ risk financing involves retaining rather than transferring the financial effects of a loss event. An organisation using retained risk financing has made the decision to keep the financial impacts of one or more types of loss event within its l________ and f________ boundaries.

Answer 8

Retained
legal
financial

Question 9

I___________ risk transfer means purchasing insurance from an insurance company. Insurance companies provide insurance against a range of potential l____ events, including asset damage, theft and l_________ claims.

Answer 9

Insurance
loss
liability

Question 10

Insurance is not available for every type of risk and where it is available it may be e__________. The alternatives that exist to insurance are termed non-c___________ risk transfer tools.

Answer 10

expensive

conventional

Question 11

Crisis management is the process by which an organisation controls disruptive and u___________ events that threaten to harm the organisation, to s__________, or to the general public. C______ management is supported by business continuity planning.

Answer 11

unexpected
stakeholders
Crisis

Question 12

Most organisations make use of third party s_______ contracts. This may be contracts for energy supply, cleaning and waste collection, or they may contract elements of their core operations via long-term o______________ arrangements. Specialist c_______ are needed to reduce the probability and impact of service contracts.

Answer 12

service
outsourcing
controls