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CGMA > SCS > Flashcards

SCS Flashcards

1
Q

What is conformance and performance in risk management?

A

Conformance = managing downside risks
Performance = managing opportunities to maximise returns

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2
Q

Define risk appetite and what two factors determine the risk appetite?

A

Risk appetite is the willingness or amount of risk an entity is willing to accept

Determined by stakeholders attitude to risk and the entities risk capacity (total amount of risk an entity can take)

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3
Q

What does SMART stand for?

A
  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-limited
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4
Q

The “scale of the risk” depends on 2 factors, what are they?

A
  • Likelihood of occurrence
  • potential downside or impact
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5
Q

In terms of risk responses what does “TARA” stand for?

A
  • Transfer
  • Avoid
  • Reduce
  • Accept
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6
Q

What is gross and net risk?

A

Gross risk aka inherent risk = risk before consideration of mitigation /reduction procedures
Net risk aka residual risk = risk after mitigation/reduction procedures

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7
Q

The risk register should consist of what?

A

The identified risk, the likelihood of occurrence and the responses

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8
Q

What are the three lines of defence for a company generally?

A
  1. Management based assurance I.e. board policies and management review
  2. Internal processes and legal based assurance
  3. External assurance I.e. internal audit, external audit, etc
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9
Q

What are three examples of erm based laws and regulations?

A

COSO
TURNBULL (UK)
SABEL-OXLEY (SOX) (USA)

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10
Q

What is risk consolidation?

A

Risk consolidation is the process of aggregating divisional/subsidiary risks at a corporate level.

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11
Q

What is EV and how is it calculated?

A

EV is expected value and is determined by summing up the outcomes (income, expense, or net) weighted by the probability of that outcome occuring.

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12
Q

What is the value at risk?

A

Value at risk is simply the Z times by the standard deviation

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13
Q

What is the certainty equivalent?

A

The certainty equivalent is a guaranteed return that someone would accept now, rather than taking a chance on a higher, but uncertain, return in the future.

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14
Q

What is r and what is r2

A

r = coefficient of correlation
r2 = coefficient of determination

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15
Q

If r = +1 what does the this mean?

A

A perfect positive correlation

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16
Q

If r = -1 what does this mean?

A

A perfect negative correlation

17
Q

What does r = 0 mean?

A

No correlation

18
Q

What does OECD stand for?

A

Organisation of economic cooperation development

19
Q

What are the three points of a fraud triangle and what are two types of fraud?

A
  1. Incentive
  2. Opportunity
  3. Attitude/behaviour

Misappropriation of assets
Fraudulent financial reporting

20
Q

Most client-server networks comprise 3 tiers, what are they?

A
  1. Presentation tier
  2. Application tier (AKA logic tier)
  3. Data tier
21
Q

What is ISO27001?

A

It sets out international standards on information technology security techniques

14 sections and 114 controls

22
Q

What are black hat and white hat hackers?

A

Black hat hackers are malicious and hack systems for personal gain whereas white hat hackers hack systems to provide feedback for improvement.

23
Q

Controls in computers are categorised in 2 ways, what are they?

A

General controls and application controls

24
Q

What are the three characteristics of big data?

A
  1. Volume
  2. Velocity
  3. Variety

4th common ‘V’ is veracity or Truthfulness

25
Q

What does satisficing mean?

A

When one decides on and pursues a course of action that will satisfy the minimum requirements necessary to achieve a particular goal.

Aim to maximise shareholder wealth while at the same time satisfying the requirements of other stakeholders.

26
Q

How is return on capital employed calculated?

A

If PBIT is used then we will take the number decided by the sum of debt and equity

If PAIT is used then we will take the number divided by equity

27
Q

How do you calculate the value of minority shareholding?

A

Useing the dividend valuation model calculated by:

dividend in year 1 dividend by the difference between cost of equity and growth rate

CGMA (1 decks)

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