5.1 Key risk management concepts

Question 1

In an organisational setting, risks arise whenever a single d_____ or a______ could result in more than one potential outcome.

Answer 1

decision

action

Question 2

U___________ can arise where it is not possible to calculate the probability and impact of the outcomes associated with a risk. Give that it is rarely possible to calculate p__________ and impact with complete accurate, a degree of uncertainty always exists.

Answer 2

uncertainty

probability

Question 3

In an objective sense, risk is a statistical concept that is quantified using p__________, i______ and e__________. Exposure is a function of probability and impacts, the greater the exposure, the greater the risk.

Answer 3

probability
impact
exposure

Question 4

It is common for risks to be c___________. This helps an organisation to understand the range of risks to which it may be exposed. Categorisation also supports the management of risk because different types of risk may require different m_________ approaches.

Answer 4

categorised

management

Question 5

There are many different approaches to categorizing risk. An organisation may develop its own approach or use an established approach provided by a risk management s________ or regulator.

Answer 5

standard

Question 6

There has been a growing recognition that traditional risk management approach do not adequately capture i________________ risks. The use of “what if” scenarios can helps organisations to identify and manage such risks.

Answer 6

interconnected

Question 7

Decision makers in organisations do not always perceive risk in an o____________ sense. Risk perceptions may affect how they view risk and may cause them to over- or under- e___________ the level of risk.

Answer 7

objective

estimate