ERM

Question 1

Relationship Between Strategic and Other Objectives

Answer 1

Operational, reporting, and compliance objectives set the mechanisms for achieving strategic objectives

Question 2

Benefits of ERM

Answer 2

(1) Promotes identification and management of entity-wide risks
(2) Increases identification of opportunities
(3) Reduces costs of negative surprises and maximizes positive outcomes
(4) Manages performance risks to reduce disruption and increase opportunity
(5) Prioritizes and maximizes allocation of resources
(6) Enhances entity resilience

Question 3

Components of ERM

Answer 3

(1) Governance and Culture
(2) Strategy and objective setting
(3) Performance
(4) Review and revision
(5) Information, communication, and reporting

Question 4

ERM Governance and Culture Principles

Answer 4

(1) Exercises board risk oversight
(2) Establishes operating structures
(3) Defines desired culture
(4) Demonstrates commitment to core values
(5) Attracts, develops, and retains capable individuals

Question 5

Inherent Limitations of ERM

Answer 5

(1) The future can’t be predicted with certainty
(2) Some events are beyond managements control and entity won’t be able to pursue all objectives to extent required
(3) No system regardless of how well designed and managed will always accomplish what intended to accomplish