Module 2 - Quiz 1

Question 1

ORM - Operational Risks

Answer 1

• Internal Fraud
• External Fraud
• Employment Practices and Workplace Safety
• Clients, Products, and Business Practices
• Damage to Physical Assets
• Business Disruption and System Failures
• Execution, Delivery, and Process Management

Question 2

SRM - Strategic Risks

Answer 2

• Strategy Development
• Strategy Execution
• Competitor
• Strategic Relationships
• Supply Chain Risk
• External Stakeholders
• Governance
• Legislative/Regulatory
• International risks

Question 3

FRM – Financial Risks

Answer 3

• Market
• Credit
• Liquidity
• Systemic
• Economic

Question 4

IRM - Insurance Risks

Answer 4

• Underwriting
• Claims
• Reserve
• Capital Adequacy Risk
• Solvency Risk
• Regulatory Capital Risk
• Economic Capital Risk

Question 5

The Four Sources of Risk

Answer 5

• Holistic View
• Risk Appetite
• Risk Aggregation
• Reporting

Question 6

Holistic View

Answer 6

ERM emphasizes the interconnectedness of these four types of risks and seeks to manage them in a coordinated manner

Question 7

Risk Appetite

Answer 7

The organization defines its risk tolerance across all risks and ensures that exposures remain within its Risk Appetite

Question 8

Risk Aggregation and Reporting

Answer 8

ERM frameworks ensure that risks are aggregated, quantified, and reported across the organization to ensure transparency and proactive management

Question 9

Risk Management Objectives: Top of Cube

Answer 9

• Operations
• Reporting
• Compliance

Question 10

Organizational Structure: Right Side of Cube

Answer 10

Cover every aspect of the business, from function level to entity level

Question 11

Risk Components: Front of Cube (in order)

Answer 11

• Control Environment
• Risk Assessment
• Control Activities
• Information & Communication
• Monitoring

Question 12

Risk Components have how many principles?

Answer 12

17

Question 13

Control Environment

Answer 13

Board and senior management establish the tone at the top set of standards, processes, and structures that provide the basis/foundation

Question 14

Risk Assessment

Answer 14

process of identifying, assessing, prioritizing, and responding to risks that can impact an entity’s ability to meet its business objectives

Question 15

Control Activities

Answer 15

The actions established that help ensure management’s directives to mitigate risks. It’s performed at all levels of the entity.

Question 16

Control Activities, Types

Answer 16

• Preventative (before an event)
• Detective (while an event is happening)
• Corrective (after the event)

Question 17

Information & Communication

Answer 17

The organization obtains or generates and uses relevant, quality information to internally and externally communicate

Question 18

Monitoring

Answer 18

Ascertains whether the components of internal
control are present and functioning. Evaluates and communicates internal control deficiencies in a timely manner.