ERM Flashcards
What are the five components of the ERM model?
The five objective of the ERM model are Governance and culture, strategy and objective setting, performance, review and revision and information communication and reporting.
4 main objective that ERM is geared towards achieving are?
The four main objective of ERM are strategic, operations, reporting and compliance.
What are the two risk COSO ERM framework identifies?
(Inherent risk) is the risk that exists before management takes any mitigation steps. (Residual risk) is the risk that remains after managements responds to inherent risk.
What is the purpose of ERM model?
The purpose of the Enterprise Risk Management Model is to provide all encompassing framework for managing risk throughout all activities of the entity.
Organizations are able to align its objectives with its risk appetite, evaluate risks and respond to opportunities.
What are some of the benefits of ERM?
Increased range of opportunities
Improved identification and management of risk entity-wide
Increased positive outcomes and reduced negative surprises
Reduced performance variability
Improved resource deployment
Enhanced enterprise resilience
What is a syndication agreement?
A syndication agreement is a contract between parties where risks are shared among all parties.
What are three activities that board of directors engage in conjunction with their oversight duties?
reviewing, challenging, and concurring with management on various topics.
approving management incentives and remuneration.
participating in investor and stakeholder relations.
What are some of the activities performed by Internal Auditors in ERM
giving assurance that the risks of the organization are correctly evaluated.
evaluating the risk-management process.
coordinating ERM activities.
What is another name for document flowchart and what does is represent?
Document flowcharts is also called horizontal flowcharts and it represents areas of responsibilities, such as departments.
What does system flowchart depict and what does it provide?
System flowcharts best depicts the path of data as it moves through an information system.
A system flowchart provides the overall view of the inputs, processes, and outputs of an information system
Audit committee responsibilities.
Audit committee is responsible for the appointment, compensation, and oversight of the refgistered firm. They may not accept any consulting, advisory services or other compensations
Each member of the audit committee must be a member of the board of directors.
The focus on considering risk in both strategy setting process and driving performance are to:
Accommodate expectations for governance and oversight
Expand reporting for greater stakeholder transparency
Recognize the globalization of markets and the need to apply a common approach across geographies
Board Of Directors obligations in terms of ERM?
Reviewing and challenging management of proposed strategy and risk appetite
Approving management incentives and remuneration
Participating in investor and stakeholder relations
Price discrimination
Price discrimination requires that consumers can be separated according to elasticity of demand, the firm must be able to prevent resale of the product, and there no cost difference for the product that would explain the different price.
