6.1: Risk Management Strategies & Objectives

Question 1

Risk Tolerances

Answer 1

Limits that define the amount of residual, uncontrolled risk that the board and management consider acceptable

Question 2

Enterprise Risk

Answer 2

The risk of an event occurring that may reduce the likelihood that the organization will achieve its objectives
External threats: natural/human hazards
Opportunity costs of making less than optimal decisions

Question 3

(6) Common Risk Management Strategies:

Answer 3

1. Avoid
2. Diversify
3. Control
4. Share
5. Transfer
6. Accept

Question 4

Controls

Answer 4

Effective controls provide assurance that the company will achieve its objectives reliably, by reducing uncontrolled risks to an acceptable level
- identifying & mitigating risks
COSO helps with this

Question 5

Enterprise-level Controls

Answer 5

Board of Directors is responsible for overseeing enterprise risk management

Major risk categories: strategic, financial, organizational, operational, external

Question 6

Common Enterprise Controls

Answer 6

• Policies and procedures manual
• Risk assessment methodology
• Change management
• Hiring & retention Methods
• Governance
• Management systems