Risk Management Flashcards
39.Continuity planning, as a part of crisis management planning, addresses:
A.Defining and communicating employee policies aimed at avoiding or mitigating risks
B.Maintaining current and detailed employee rosters so employee locations can be confirmed after an evacuation
C.Training employees to understand their roles in the event of a crisis
D.Identifying the essential HR processes that will need to continue or return quickly to an operational level following a crisis
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (pp. 1288-1289). McGraw-Hill Education. Kindle Edition.
39.D is correct. The responsibility to identify essential HR processes that will need to continue or return quickly to an operational level following a crisis is part of the continuity responsibility portion of contingency planning.
A, B, and C are incorrect.
A addresses policy responsibilities,
B addresses evacuation and relocation responsibilities, and
C addresses training responsibilities.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1320). McGraw-Hill Education. Kindle Edition.
40.Crisis management planning requires a significant planning effort. Who is best to sponsor this effort?
A. The chief executive officer
B. The chief financial officer
C. The HR manager
D. The operations manager
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1289). McGraw-Hill Education. Kindle Edition.
40.A is correct. Since contingency plans require a significant investment in resources, not for the purpose of making money but for the purpose of preventing loss and minimizing cost, it is best to secure support at the highest level within the organization (for example, from the CEO).
B, C, and D are incorrect. While these positions play a key role in developing an organization’s contingency plan, the CEO is the best choice to sponsor the planning effort.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (pp. 1320-1321). McGraw-Hill Education. Kindle Edition.
41.In which phase of the risk management process does oversight most likely occur?
A. Identify and analyze risks
B. Manage risks
C. Review effectiveness of risk
D. All phases
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1289). McGraw-Hill Education. Kindle Edition.
41.D is correct. While the risk management process organizes risk management into four phases (in other words, establish the context of risk, identify and analyze risks, manage risks, and evaluate risk), the responsibility to exercise oversight occurs in all phases of the risk management process.
A, B, and C are incorrect. They are incorrect because they are phases that occur during the risk management process. Oversight is a responsibility that must be met in all phases of the risk management process.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1321). McGraw-Hill Education. Kindle Edition.
42.The PAPA model, used by the LEGO Group, features four quadrants distributed over two axes. Each quadrant represents recommended organizational actions labeled Prepare, Act, Park, and Adapt. Which of these four actions is characterized by events that are actually slowly materializing trends that may significantly affect the organization?
A. Prepare
B. Act
C. Park
D. Adapt
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1289). McGraw-Hill Education. Kindle Edition.
42.D is correct. Adapt is the quadrant that addresses events that are slowly materializing and may significantly affect the organization. Under these circumstances, an organization may recognize that there is no urgent, immediate need for action; in fact, the need can be addressed incrementally over a multiyear period.
A, B, and C are incorrect.
A is incorrect because Prepare addresses events that are not likely to happen, but if they do, they will materialize quickly.
B is incorrect because Act addresses events that are both highly probable and fast-moving.
C is incorrect because Park addresses events that are slow moving and unlikely. Each of the four quadrants identifies conditions that call for different actions on a two-axes scale of likelihood and speed of change.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1321). McGraw-Hill Education. Kindle Edition.
43.Which of the following is an example of a strategic risk?
A.The HR director reports an executive to the internal audit committee for suspected violation of Sarbanes-Oxley.
B.The trade agreement between the United States and China changes.
C.The economic development tax laws change at a foreign subsidiary.
D.A financial services company issues loans to people with fair credit scores.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (pp. 1289-1290). McGraw-Hill Education. Kindle Edition.
43.D is correct. A financial services firm may deliberately choose to issue loans to a traditionally underserved market, such as people with fair credit scores, to increase its market share. While a fair credit rating may indicate the person may have challenges repaying the loan when compared to people with excellent and good credit ratings, it is a risk the organization is willing to take to position itself to capture a new market segment.
A, B, and C are incorrect.
A is incorrect because this describes an internal and preventable risk.
B and C are incorrect because they are both examples of external risks that the organization has no control over. For all answers, strategic risks are those the organization undertakes to deliberately impact its market position.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (pp. 1321-1322). McGraw-Hill Education. Kindle Edition.
44.An organization reviews its risk management strategy each year during the planning process where budgets and new services are discussed. Which aspect of the ISO risk-aware and risk-intelligent framework do these behaviors align to?
A. Periodic management and review framework
B. Continual improvement of the framework
C. Implementing risk management
D. Design of the framework
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1290). McGraw-Hill Education. Kindle Edition.
44.B is correct. Yearly review of the framework allows the company to adjust the risk management strategy to support a change in management approaches on a continual basis.
A, C, and D are incorrect.
A is incorrect because reviewing the framework periodically is done to measure how well the risk management strategy is delivering on its goals.
C is incorrect because implementing is putting the risk management plan into action.
D is incorrect because designing the framework refers to determining governance and components of the risk management strategy.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1322). McGraw-Hill Education. Kindle Edition.
45.A risk that affects how the organization creates value is what type of risk?
A. Operations
B. Financial
C. Compliance
D. Strategy
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1290). McGraw-Hill Education. Kindle Edition.
45.A is correct. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the COSO Enterprise Risk Management (ERM) integrated framework identify any risk to the way an organization creates value as an operations risk.
B, C, and D are incorrect.
B is incorrect because financial reporting risks are risks to the accuracy and timeliness of reporting a company’s financial results.
C is incorrect because compliance risks refer to risks to a company’s ability to adhere to laws and regulations.
D is incorrect because strategy risks are risks to the organization being able to achieve its strategic objectives.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1322). McGraw-Hill Education. Kindle Edition.
46.An organization has seen a 4 percent increase each year for the past 2 years in the number of sexual harassment and bullying complaints. As the VP of HR, you are concerned that the national attention being given to sexual harassment may cause more complaints to turn into lawsuits. How would you best approach this type of risk using the PAPA model?
A. Adapt
B. Park
C. Prepare
D. Act
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (p. 1290). McGraw-Hill Education. Kindle Edition.
46.D is correct. With an increase in the visibility of sexual harassment and bullying cases in the media, the HR VP, in this case, is rightfully concerned that not immediately addressing this slight increase in complaints could mushroom into a much bigger issue. Risks that are classified as ones to “act” on are highly probable and fast moving.
A, B, and C are incorrect.
A is incorrect because “adapt” events are happening slowly but are likely to continue. The sexual harassment and bullying complaints are trending as if they are likely to continue, but it is debatable as to whether the complaints are increasing quickly or slowly.
B is incorrect because “park” events are not high priority. They are unlikely risks, and even if they do turn out to be a risk, they will impact the environment slowly enough that a risk management approach can be developed and implemented before the risk negatively impacts the organization.
C is incorrect because you must be ready for “prepare” events if they occur because they happen quickly, but it is unlikely that they will happen.
Willer, Dory; Willer, Dory; Truesdell, William H.; Truesdell, William H.; Kelly, William D.; Kelly, William D.; Simon-Walters, Joanne; Simon-Walters, Joanne. SHRM-CP/SHRM-SCP Certification Bundle (All-In-One) (pp. 1322-1323). McGraw-Hill Education. Kindle Edition.
