Extra x2

Question 1

Rafiq chooses to accept the risks associated with his favourite pastime of deep-sea diving. This
choice is an example of

Answer 1

Risk voluntariness

Question 2

Where a simple risk description table is contained within a risk register, ‘scope of risk’ relates to

Answer 2

a description of associated possible events that might materialise.

Question 3

The ISO 31000 risk management standard contains a process section which covers

Answer 3

risk identification, assessment and management.

Question 4

Published international risk management standards should always aim to

Answer 4

establish a benchmark of best practice in the main areas of risk management

Question 5

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

Answer 5

predict project benefits and the resources that will be required.

Question 6

When operating within a risk management framework, identifying risks that are unacceptable to an
organisation is known as risk

Answer 6

Evaluation

Question 7

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

Answer 7

eliminate inherent conflict between the compliance, risk and audit functions.

Question 8

One of the levels of Renn and Rohrmann’s structured framework on risk perception is

Answer 8

Emotional factors

Question 9

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

Answer 9

Aggregated losses

Question 10

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

Answer 10

Risk retention

Question 11

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

Answer 11

collective reasoning strategies.

Question 12

A risk manager in an organisation is calculating a risk factor. The two components in the calculation are

Answer 12

probability and impact.

Question 13

How did the large fluctuations in prices of many raw materials and commodities in the 1970’s influence the evolution of risk management?

Answer 13

The use of derivatives as a risk management tool increased.

Question 14

When considering risk management within a manufacturing organisation, what is a benefit of conducting a detailed structured analysis of the entire organisation?

Answer 14

It would uncover weaknesses and provide valuable information that can be used to improve processes.

Question 15

Why is it important that an organisation attempts to measure the benefits of risk management in financial terms?

Answer 15

It will quantify the level of internal and external resources that are required.

Question 16

An organisation operates with separate and independent risk management, compliance and audit functions. The organisation’s board of directors should be aware that

Answer 16

work will often be duplicated and costs will usually be increased.

Question 17

What is typically the day-to-day responsibility of a Chief Risk Officer within a large organisation?

Answer 17

Ensuring that all key risks are adequately managed and reported.

Question 18

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?

Answer 18

Analysing risks.

Question 19

One of the reasons that an organisation should monitor and regularly review its risk management process is to

Answer 19

consider whether lessons could be learned for future management of risks.

Question 20

What is a key consideration when designing an organisational risk register?

Answer 20

The organisation’s risk profile should be captured.

Question 21

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?

Answer 21

Flow chart.

Question 22

Within an organisation, business risk can be categorised as the

Answer 22

probability of a loss being inherent in an organisation’s operations and environment.

Question 23

When implementing an enterprise risk management (ERM) framework, a large organisation should be aware that ERM

Answer 23

relies largely upon the analysis and evaluation of risks against criteria that are set by the Board.

Question 24

An organisation will typically find that its insurance arrangements will exclude cover for

Answer 24

the value of its computerised database.

Question 25

Insurance policies issued by a commercial insurer operating solely in the UK are directly governed under which Act?

Answer 25

Insurance Act 2015.

Question 26

A broker is undertaking a business interruption review on behalf of a client. This would most commonly include an evaluation of the

Answer 26

effectiveness of a business continuity plan.

Question 27

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

Answer 27

be liable for all future losses incurred on these credit agreements.

Question 28

For what primary reason could enterprise risk management (ERM) systems fail?

Answer 28

Financial constraints could compromise the implementation of ERM systems.

Question 29

What is a surety agreement

Answer 29

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

Question 30

Key risk indicator (KRI) vs key control indicator (KCI)

Answer 30

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.

Question 31

Risk perception means

Answer 31

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