Day 20 Flashcards

1
Q

Dividend distributions represent:

A

Value Realization

MCQ-06256

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2
Q

What assessment techniques can be used to assess risk?

A
  1. Benchmarking
  2. Objective statistical data with estimable probabilities
  3. Subjective assumptions which take into account impact without probabilities

MCQ-00645

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3
Q

According to the COSO Enterprise Risk Management-Integrated Framework, uncertainty in Enterprise Risk Management refers to:

A

The state of not knowing how or if potential event may occur

MCQ-12465

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4
Q

True or False: ERM framework encompasses - Decreasing Inherent risk appetite

A

False

Inherent risk is the risk that exists when the company takes no action. ERM manages risk so that it aligns with the risk appetite

MCQ-09005

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5
Q

In ERM, when does Event Identification take place?

A

After developing objectives

MCQ-06490

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6
Q

Components of ERM: Governance and Culture

A
  • Desired Culture
  • Oversight
  • Values
  • Employees
  • Structure

MCQ-06257

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7
Q

What ERM component is committed to attracting, developing, and retaining capable individuals?

A

Governance and Culture

MCQ-06259

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8
Q

Components of ERM: Strategy and Objective setting

A
  • Evaluate alternative Strategies
  • Objectives
  • Analyze business context
  • Defines Risk appetite

MCQ-06261

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9
Q

Define: Residual Risk

A

The risk that remains after MGMT has taken actions to mitigate negative events

MCQ-06149

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10
Q

Risk appetite has generally been exceeded when:

A

The likelihood and impact of negative events significantly exceed Residual Risks.

MCQ-06149

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11
Q

A company’s performance guidelines sets a lower limit of 3% unfavorable material usage variance for its production facility. What ERM principal aligns with this performance guideline?

A

Formulating business Objectives

MCQ-15782

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12
Q

According to COSO ERM, MGMT considers the following risks:

A
  1. Inherent risk
  2. Actual Residual Risk
  3. Target Residual Risk

Note: Unknown risk is not a specific consideration

MCQ-12447

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13
Q

How is statistical risk ranking methodology used?

A

The assessment of the severity of risk is contained within the Performance component

Assessing risk severity includes the likelihood of the risk occurring and the impact if it does occur

MCQ-14802

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