Extra x2 Flashcards
Rafiq chooses to accept the risks associated with his favourite pastime of deep-sea diving. This
choice is an example of
Risk voluntariness
Where a simple risk description table is contained within a risk register, ‘scope of risk’ relates to
a description of associated possible events that might materialise.
The ISO 31000 risk management standard contains a process section which covers
risk identification, assessment and management.
Published international risk management standards should always aim to
establish a benchmark of best practice in the main areas of risk management
A mergers and acquisition proposal document has been submitted for consideration by the Board
of Directors of an organisation. This document will be useful in identifying risks as it will
predict project benefits and the resources that will be required.
When operating within a risk management framework, identifying risks that are unacceptable to an
organisation is known as risk
Evaluation
The Compliance Director within a large organisation is considering implementing a governance,risk
and compliance framework. The primary objective she would be seeking to achieve is to
eliminate inherent conflict between the compliance, risk and audit functions.
One of the levels of Renn and Rohrmann’s structured framework on risk perception is
Emotional factors
As a result of recent flooding, a delivery company’s vehicles have all been destroyed. The company
now faces losses in respect of its vehicles,revenue and reputational damage. These are examples
of
Aggregated losses
A global organisation has established a captive insurance arrangement rather than transferring all
insured risks externally. A key disadvantage of this course of action is
Risk retention
An organisation following the Renn and Rohrmann structured framework should be aware that an individual’s risk perception is influenced by common sense, which is also referred to as
collective reasoning strategies.
A risk manager in an organisation is calculating a risk factor. The two components in the calculation are
probability and impact.
How did the large fluctuations in prices of many raw materials and commodities in the 1970’s influence the evolution of risk management?
The use of derivatives as a risk management tool increased.
When considering risk management within a manufacturing organisation, what is a benefit of conducting a detailed structured analysis of the entire organisation?
It would uncover weaknesses and provide valuable information that can be used to improve processes.
Why is it important that an organisation attempts to measure the benefits of risk management in financial terms?
It will quantify the level of internal and external resources that are required.
An organisation operates with separate and independent risk management, compliance and audit functions. The organisation’s board of directors should be aware that
work will often be duplicated and costs will usually be increased.
What is typically the day-to-day responsibility of a Chief Risk Officer within a large organisation?
Ensuring that all key risks are adequately managed and reported.
A large organisation is using a typical risk management process and has just established and identified the risks to which it is exposed. What is likely to be the next stage in the process?
Analysing risks.
One of the reasons that an organisation should monitor and regularly review its risk management process is to
consider whether lessons could be learned for future management of risks.
What is a key consideration when designing an organisational risk register?
The organisation’s risk profile should be captured.
A logistics manager for a supermarket chain identifies that there is a continual delay in the deliveries to stores. What is the most appropriate technique to identify the cause of the problem?
Flow chart.
Within an organisation, business risk can be categorised as the
probability of a loss being inherent in an organisation’s operations and environment.
When implementing an enterprise risk management (ERM) framework, a large organisation should be aware that ERM
relies largely upon the analysis and evaluation of risks against criteria that are set by the Board.
An organisation will typically find that its insurance arrangements will exclude cover for
the value of its computerised database.
Insurance policies issued by a commercial insurer operating solely in the UK are directly governed under which Act?
Insurance Act 2015.
A broker is undertaking a business interruption review on behalf of a client. This would most commonly include an evaluation of the
effectiveness of a business continuity plan.
A large organisation has entered into a surety arrangement using a counterparty to guarantee certain credit agreements. The main risk to the organisation of the counterparty failing is that the organisation would
be liable for all future losses incurred on these credit agreements.
For what primary reason could enterprise risk management (ERM) systems fail?
Financial constraints could compromise the implementation of ERM systems.
What is a surety agreement
In finance, a surety, surety bond or guaranty involves a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults
Key risk indicator (KRI) vs key control indicator (KCI)
KRIs help identify increases in the probability of incidents occurring early enough to prevent them. KCIs indicate controls are not working effectively or have failed.
Risk perception means
Risk perception refers to people’s subjective judgments about the likelihood of negative occurrences
E.g. our perception of risk is reduced if we choose a risk voluntarily, and our risk perception is increased if the risk is imposed on u
