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I11 Introduction to Risk Management > Chapter 5 - Risk Assessment > Flashcards

Chapter 5 - Risk Assessment Flashcards

1
Q

Difference between Risk data and Risk information?

A

Risk Information is wider and includes facts and numbers (data) as well as opinions and judgements

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2
Q

What is risk information?

A

Any information that may influence a decision about risk

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3
Q

What is qualitative information?

A

Description of something in spoken or written word

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4
Q

What is quantitative information?

A

Something that can be measures or counted

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5
Q

What is subjective information?

A

An opinion or a judgement about something. It is influenced by personal experience and feelings

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6
Q

What is objective information?

A

Facts

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7
Q

What is static information?

A

Usually fixed and cannot be altered (e.g. a person’s date of birth)

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8
Q

What is dynamic information?

A

Capable of change

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9
Q

List the Internal risk identification techniques

A
  1. Talk to people
  2. Workshops
  3. Meetings and committees
  4. Checklists
  5. Procedures manuals
  6. Internal audit and compliance monitoring
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10
Q

List the External risk identification techniques

A
  1. Research
  2. Stress test and scenario analysis
  3. External audit reports
  4. Reading insurance documents
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11
Q

Risk identification is not an ongoing process, true or false

A

False

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12
Q

What are the techniques to break down complexity in order to identify risks

A
  1. Workshops and brainstorming
  2. Business process analysis
  3. . Inspections and audits
  4. Flow, process and dependency analysis
  5. Organisation charts
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13
Q

What is the FIRM scorecard?

A

A way to classify risks into 4 groups: Financial, Infrastructure, Reputational and Marketplace, with additional subcategories

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14
Q

What is a risk register?

A

Risk information stored in a logical easily accessible and understandable form - a database.

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15
Q

Inherent Level?

A

Assuming any controls and precautions fail to work

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16
Q

Residual Level?

A

Controls and precautions are in place.

17
Q

What risk level is used?

A

Depends on the sector/industry/type of assessment

18
Q

How can risk evaluation be described?

A

The process of taking the results of risk analysis and then relating them to the ‘bigger picture’ context which the business operates in.

19
Q

List the criteria for evaluating risks

A

Financial, legal and operational

20
Q

Why is a regular review important?

A

Risks are always changing

21
Q

What are the difficulties regarding risk registers?

A

Need to think about:

  • Unknown risks
  • Can provide false sense of security
  • Can be long and hard to cope with
  • May not be updated frequently
  • May fail to account for correlations between risks
22
Q

What is a hazard?

A

Anything that can cause harm

23
Q

What are flow, process and dependency charts?

A

Analysis of the processes and operations within an operation to identify critical components that are key to success

24
Q

What are fault trees and root cause analysis?

A

These take an undesirable event as a starting point and works backwards to identify the origins

25
Q

Internal Financial in FIRM?

A

Historical Liabilities, Liquidity and Cashflows

26
Q

Internal Reputational in FIRM?

A

Brand extensions, board composition, control environment.

27
Q

What is the difference between Risk analysis and evaluation?

A

Analysis - spotting patterns, analysing patterns, organising ideas and recognising trends

Evaluation - Comparing ideas, evaluating outcomes, solving problems and recommending solutions

28
Q

How can insurance documents be useful to aiding risk identification?

A

Insurers conduct surveys which include risk exposures and recommendations to improve/control the risk

29
Q

What is a Risk Management Information system?

A

Routine collection of risk information can be assisted by IT systems specifically for the use of the risk team

I11 Introduction to Risk Management (7 decks)

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