4 - Tools and techniques 1: Risk identification

Question 1

The schedule to an insurance policy shows the variable details of the policy, including:

Answer 1

details of the subject matter.

Question 2

What is the MAIN benefit of employing a HR consultant to help identify the people risks within an organisation?

Answer 2

The consultant will have in depth and up to date knowledge of HR risks.

Question 3

A fault tree is BEST described as a:

Answer 3

method of understanding the potential for failure to deliver what is critically needed and to search out the possible cause of that failure.

Question 4

According to the Aon Global risk management survey, what type of risk was of greatest concern in 2021?

Answer 4

Cyber attacks and data breaches.

Question 5

A manufacturer wants to understand what impact a loss of electricity supply will have. It has asked operations managers to submit reports on the impact of power outages lasting different lengths of time. What method of risk identification is being used?

Answer 5

A desktop exercise.

Question 6

One DISADVANTAGE of collecting risk information from documents is that:

Answer 6

information may be presented in a way that reflects the writer’s point of view.

Question 7

A company has plans to build a power station which will incorporate a new type of nuclear reactor it is developing. A hazard and operability study would be MOST effective in enabling the company to identify and reduce the associated risks at what stage in the process?

Answer 7

When designing the nuclear reactor.

Question 8

The MAIN advantage of using a checklist to gather risk information is:

Answer 8

it is a cheap and efficient way of collecting large amounts of standardised information.

Question 9

A washing machine manufacturer wants to better understand the production process from components to end delivery. What method of risk identification will be MOST useful to identify the crucial dependencies?

Answer 9

A flow chart.

Question 10

The Health and Safety committee of a business has recently met to discuss the impact of new construction site regulations. Which document will be MOST useful to the risk department as part of their risk identification activities in understanding the key decisions made?

Answer 10

Minutes

Question 11

List four sources of internal information.

Answer 11

• people;
• meetings;
• committees;
• documents;
• databases; and
• observation.

Question 12

List four sources of external information.

Answer 12

• Government organisations or organisations linked to the Government;
• business and professional institutions;
• insurers and related organisations;
• databases;
• emergency services;
• consultants;
• newspapers and magazines;
• company reports; and
• conferences.

Question 13

Risk professionals are encouraged to go and look at an area under study. Why is this important?

Answer 13

Frequently the physical picture bears little resemblance to a picture created by paperwork carried out in an office. A visit also allows face-to-face conversations with people on site. As well as identifying risks, surveys normally result in recommendations to improve their management.

Question 14

How can brainstorming assist the risk management professional within an organisation?

Answer 14

There is a wealth of knowledge, experience and understanding within the organization’s own employees. The ‘brainstorm’ is one way of tapping into that understanding.

Question 15

The more you know about risks you face, the more chance you have of …

Answer 15

making the right decisions needed to meet your objectives.

Question 16

We need to list as many risks as possible that affect our organisation. The more risks we recognise the better …

Answer 16

prepared we can be.

Question 17

An organisation can be affected by both external and internal …

Answer 17

Risks

Question 18

It is a significant challenge for a risk department to identify all activities concerning an organisation that may give rise to …

Answer 18

Risk

Question 19

Do Risks need to be identified in a logical and cost-effective manner?

Answer 19

Yes/True

Question 20

It is those risks that threaten the objectives and deliverables of an organisation that are seen as greater threats than …

Answer 20

The financial cost of damage

Question 21

Risk committees are the link between …

Answer 21

the board and all other functions. Audit committees also discuss risk.

Question 22

Other documents with risk information include …

Answer 22

proposal papers, auditors’ reports, insurance documents, procedures manuals and historical risk reports.

Question 23

Government organisations publish general risk information, often sorted in specific categories? True

Answer 23

True

Question 24

Business and professional institutions publish useful information on …

Answer 24

best practice, standards, audits, management and governance issues.

Question 25

Various organisations often have common interests in reducing certain types of risk. They might organize themselves to maintain joint databases of useful information?

Answer 25

True

Question 26

Emergency services can provide information on

Answer 26

Risk and trends in risk

Question 27

Consultants can provide …

Answer 27

focused current information, specialist skills or just additional resources.

Question 28

Newspapers and magazines can produce quality, in-depth reports on major incidents. There are lots of magazines and academic journals that are devoted to aspects of risk in a national or international context. True?

Answer 28

True

Question 29

Company annual reports may contain …

Answer 29

a substantial analysis of key corporate risks.

Question 30

Conferences bring together …

Answer 30

experts and specialists in particular fields.

Question 31

In any organisation risks and/or their impact can change …

Answer 31

At any time

Question 32

Risk departments must keep adequate detailed records in a form that facilitates information search, retrieval and analysis? True?

Answer 32

True

Question 33

Risk departments must also keep an audit trail of significant decisions and actions, together with the basis on which these decisions were made. Such a record will provide base points against which future changes can be …

Answer 33

measured and handled.

Question 34

Techniques to help identify risks include

Answer 34

organisation charts, flow charts, checklists and questionnaires, physical inspections, brainstorming and workshops, fault trees and HAZOP studies.

Question 35

Organisation charts show who reports to who, so you can see …

Answer 35

the route important decisions take as they escalate through the organisation.

Question 36

Flow charts show how goods and services come together to achieve a final product. They highlight …

Answer 36

critical links and dependencies within the process.

Question 37

Checklists and questionnaires are an efficient way of collecting useful information from many people, even in different locations. They need proper preparation and are most useful …

Answer 37

in conjunction with data from another source.

Question 38

Physical inspections are better than desk studies for gaining

Answer 38

a real appreciation of risks. Specialized surveyors will know how to evaluate risks in particular types of operation.

Question 39

Brainstorming is a technique to help a group of people share knowledge and develop ideas, and as such can be …

Answer 39

focused on risks.

Question 40

Fault trees highlight possible causes of

Answer 40

failure to deliver end product. They allow probability of failure to be investigated and managed.

Question 41

HAZOP (Hazard and operability) studies are rigorous, detailed and usually contain computerized …

Answer 41

fault tree analyses of safety critical systems or system components, often conducted during their design.

Question 42

Why should risk departments take a detailed interest in procedures manuals?

Answer 42

Risk departments should take interest in procedures manuals because this is where procedural risk management is implemented ..

Question 43

Why are large companies including risk information in their annual reports?

Answer 43

Large companies include risk information in their annual report to demonstrate proper management and risk awareness.

Question 44

What makes routine procedures for collecting risk information effective?

Answer 44

To be effective, procedures for collecting risk information must be clearly documented and issued with the authority of the managing director or chief executive officer.

Question 45

Why are checklists and questionnaires useful tools for gathering information?

Answer 45

To collect information in a common format to simplify comparisons and analyses of the information.

Question 46

What is the difference between a flow chart and a fault tree?

Answer 46

Flow charts show how goods and services come together to achieve a final product. Fault trees highlight possible causes of failing to deliver that product.

Question 47

What are fault trees used for?

Answer 47

Fault trees are used to investigate what could cause supplies to cease and consider the likelihood of that happening.

Question 48

HAZOP

Answer 48

Is a method of risk identification

A method of quantifying risk that can work well alongside the fault tree is called the hazard and operability (HAZOP) study. At its simplest, this can be development of a fault tree that has identified a key piece of equipment on which the organisation’s ability to deliver depends. Complex HAZOP studies require significant computing resource.
HAZOP studies are rigorous, detailed and usually contain computerised fault tree analyses of safety critical systems or system components, often conducted during their design.