CH 2: RM Standards and Framework

Question 1

What is RM Standard?

Answer 1

a document published by a recognized authority:
that includes 
1. Principles and objectives, 
2. Criteria,
3. Best practices, for RM.

Question 2

What is Framework?

Answer 2

a structure supporting RM process, including:

1. concepts,
2. methods,
3. procedures and metrics

Question 3

What are the 7 attributes of standards and framework (each having 1 - 5 maturity level)?

Answer 3

1. ERM based.
2. Structured process steps. (RM is in all decisions)
3. Understand risk apatite
4. find root causes
5. uncover risk
6. Performance management
7. Assess business resiliency and sustainability

Question 4

What are the 5 levels of maturity (of the 7 attributes)?

Answer 4

a. ad hoc
b. initial
c. repeatable
d. managed
e. leadership

Question 5

what are the 3 well-known RM Standards?

Answer 5

1. ISO 31000: hass engineering attitude
2. COSO ERM: has its basis in fin’l risk & emphasize process
3. BS 31100:

Question 6

Under ISO 31000, what are its 3 major parts and how is Risk defined?

Answer 6

A. 1. Principles (clause 3) مبادئ
2. Framework (clause 4) الإطار
3. Process (clause 5) المنهج
B. The effect of uncertainty on objectives. bears a negative and positive potential.

Question 7

Under COSO, define risk.

Answer 7

the possibility that an event will occur and adversely effect an org.’s objectives. Deals mainly w/ negative outcomes.

Question 8

COSO was designed to help org achieve its objectives in 4 categories:

Answer 8

1. Strategic
2. Operations
3. Reporting: reliable
4. Compliance: with laws

Question 9

Solvency and Basel regulations are targeted towards:

Answer 9

Solvency is for Insurance Companies

while Basel are for Financial Services

Question 10

b/c fin’l are highly leveraged (use a lot of debt- liability) they are required to

Answer 10

maintain a minimum level of equity (capital).

Question 11

Why do we use RM Standards and Frameworks?

Answer 11

1. create a structure

2. allow improvements and comparisons

Question 12

What is Risk Criteria?

Answer 12

It reference standards, measurements, and expectations used in judging the significance of a given risk in context w/ strategic goals

Question 13

Describe the differences and similarities of ISO 31000 and COSO 2004

Answer 13

COSO
. states that risk Management is a multidirectional process in which any component influences another.
. It helps an org achieve its goals in 4 categories:
1. Strategic
2. Operations
3. Reporting
4. Compliance

ISO:
. Integrate the risk management process into their management and operational systems