Knowledge Check Flashcards
The principal risks section of an annual report and accounts of a company is primarily used to inform who?
Investors
The dimensions of physical hazard are always what?
Measurable
When a person becomes familiar with a risk they are expoed to over time they will usually?
Underestimate the real risk
The probability of loss that is inherent in an organisations operations & environment is a description of what type off risk?
Business risk
Which term is used to describe the sbort-term actions that together will achieve a log-term objective?
Tactics
A company must comply with the rules and regulations that exist in any territories where it operates. The potential legal risks are highest where?
Europe
For a global business an example of a concentration risk is?
A many provider of an outsourced provider going into liquidation
Whey considering the risk management process the risk analysis step involves what?
Identifying how often risks to a business could cause damage
What aspect of managing risk did enterprise risk management introduce?
The ability to identify potential opportunities
The risk assessment process involves three steps: identification, analysis and what?
Evaluation
Which risk identification technique involves open discussion and debate between subject matter experts of the risky involved in the particular area of risk under review?
Brainstorming
A company has employed a security company to design a camera system to monitor its warehouses. What term is used to describe this type of risk management information system?
Bespoke
Which risk identification technique asks what if questions to find ang vulnerability in a process?
Business process analysis
What is the starting point for constructing a fault tree?
As undesired event
The four risk segments that make up a FIRM scorecard are:
Financial
Infrastructure
Reputational
Marketplace
The FIRM scorecard emphasises that some risks are externally driven whilst others are internally driven. Those risks that are internally driven include:
Historical Liabilities
Risk evaluation differs from analysis in that evaluation
Takes the results of analysis and apply them to the context in which the business operates
What is the main benefit of analysing risk using frequency risk bands?
It is easy to see the importance of one risk against others
How is the impact of risk usually recorded in a risk register if it cannot be measured in financial terms
By attaching a risk code
How would an influenza pandemic be categorised on a risk matrix?
High impact and high likelihood
What is the final stage of the risk assessment process?
Risk evaluation
An insurer regularly and thoroughly reviews its risk appetite. From a risk perspective this is most likely to make Senior management
Risk seeking
Which type of control barrier would be most effective to ensure the safety of a mother and baby on a maternity ward?
Physical barrier
Corrective controls
Help an organisation to recover from loss or damage that has taken place
Securitisation of risk involves transferring financial risky to
A professional risk carrier
Why do investors put their money into securitisation products?
To spread the risk of their portfolios
An agreement between two parties designed to release one party from legal claims is called a
Hold harmless agreement
Involuntary risk retention may occur when an
Organisation wishes to take an opportunity risk
An example of dread risk is
A skyscraper fire
The term used to describe the appetite, attitude and understanding of risk that is shared by a group of people is risk:
Culture
The forced closure of equitable life to new business is an example of:
A man-made disaster
A government has failed to adequately invest in upgrading its transportation system over many years. This is an example of:
Economic risk
Strategic risk is usually associated with an organisations:
Long term objectives
A manufacturer is considering exporting its washing machines to a new market in a country subject to trade quotas. What type of risk will it be exposed to as a result of the quotas?
Compliance
What is the second step of the risk assessment process?
Risk analysis
Which type of risk identification is best suited to identifying obscure risks that lie hidden?
Organisation charts
Regulatory enforcement is a category of which of the four main segments of the firm scorecard?
Reputational risk
A company has identified a potential cash flow risk from having to pay supplies before being paid by customers. How would this be categorised on the firm scorecard?
An internally driven financial risk
Which of the four risk control classes is described as “after the event measures to identify when an incident has happened”?
Detective
Detective controls are designed to:
Identify unwanted occurrences that have already happened
Risk controls are usually designed to ensure that residual losses are within an organisations risk:
Appetite
Effective insurance is available to cover:
Computer breakdown
Contracts that enable someone to buy or sell a specified asset at a specified date in the future at a specified price are called:
Financial derivatives
A contract between three parties where one party accepts the risk that the principal to a contract does not perform or complete is called a:
Surety agreement
How is the risk of shoplifting most likely to be managed by an organisation
Through voluntary risk retention
Who is ultimately responsible for risk assessment and management in an organisation?
The board of directors collectively
A hazard is best described as
Anything that causes harm
What does the compliance department within an organisation do?
Compare an organisation’s processes against external rules.
What is the main benefit of analysing risks using frequency risk bands?
It is easy to see the importance of one risk against others.
A company has arranged life cover on its sales director, who is key to generating new business for the company. What type of risk control has it used?
Corrective
What is the main reason for large organisations using securitisation instruments?
Traditional insurance cover is not available or too costly.
A requirement to wear protective clothing whilst performing dangerous duties is an example of a:
Directive Control
Preventive risk control measures include:
Separation of duties
Preventive risk control measures include:
Separation of duties
Risk controls are usually designed to ensure that residual losses are within an organisation’s risk:
Appetite
