CISI Risk - Chapter 9

Question 1

Who is responsible for the day to day running of the company?

Answer 1

Board of directors

Question 2

7 Responsibilities of the board of directors

Answer 2

Financial Oversight
Companies approach to risk
Culture setting
Monitor companies exposure to risk
Identify risks inherent in companies business model
Oversee effectiveness of management
Effective crisis management

Question 3

3 Responsibilities of the risk committee

Answer 3

Ratify the key policies
Effectiveness of these policies
Translate overall risk appetite of the firm

Question 4

What is the risk management committee of the board responsible for?

Answer 4

Independently reviewing the identification, measurement, monitoring and controlling of all risk types

Question 5

What two things does the risk committee determine?

Answer 5

Amount of financial risk
Amount of non-financial risk

Question 6

How frequently does the board approve the firms risk appetitie?

Answer 6

Yearly

Question 7

What does the CRO (Chief Risk Officer) have the authority to do (3)

Answer 7

Make decisions on the risk committees behalf
Set business level risk limits
Approve risks above limits

Question 8

What 3 other things is the CRO responsible for?

Answer 8

Firms risk management strategy
Risk polices and methodologies
Firms infrastructure can support its risk management objectives

Question 9

What is the first line of defense

Answer 9

Business Management

Question 10

Who is responsible for the first line of defence?

Answer 10

Day-to-day operations

Question 11

What is the second line of defense

Answer 11

Independent risk function

Question 12

Who is responsible for the second line of defence?

Answer 12

Independent risk functions (Including Compliance)

Question 13

What is the third line of defense?

Answer 13

Internal Audit

Question 14

Staff in controlled functions must be what?

Answer 14

Approved by the FCA

Question 15

What are the three key challenges to implementing risk governance structure

Answer 15

Appropriate autonomy and authority
Seg of duties
Relationship of risk managers to business

Question 16

Key policies - What is Ownership and Management

Answer 16

Individual Accountability, eg Senior Management and SMCR

Question 17

Key policies - Staff remuneration policy

Answer 17

Staff pay

Question 18

Key policies - Staff Appraisal

Answer 18

Is risk management being made a priroty?

Question 19

Key policies - Risk policy

Answer 19

Comprehensive enough to cover all risks?

Question 20

Key policies - Risk functions and independence

Answer 20

How independent is the head of risk?

Question 21

Risk policies - Escalation and whistle-blowing process

Answer 21

Clearly defined to allow staff to easily report misconduct

Question 21

Risk policies - Caliber of risk personal

Answer 21

How much is a firm willing to pay for high caliber personal

Question 22

Risk policies - Code of conduct

Answer 22

What ethics are to be followed by all staff?

Question 23

7 Things that should be publically disclosed according to Principle 12 of the BIS

Answer 23

Board structure
Ownership structure
Organizational charts
Incentive structure
Code of business conduct
Conflicts of interest policy
Risk management policy

Question 24

What risk would poor management of integrity, ethics and social responsibility induce?

Answer 24

Reputational

Question 25

What is the “Silo Effect”

Answer 25

Staff only being concerned with their own area because of a lack of shared vision throughout the organisation

Question 26

What is a moral hazard?

Answer 26

The idea that staff will become careless of risks as they are are safety nets in place

Question 27

Which line of defense would compliance fit into?

Answer 27

Second Line

Question 28

Are u gonna pass

Answer 28

Yes