Enterprise Risk Management (ERM)

Enterprise risk management (ERM) helps management address all of the following except:

Within the COSO Internal Control - Integrated Framework, which of the following components is designed to ensure that internal controls continue to operate effectively?

Which risk response reflects a change from acceptance to sharing?

Which of the following controls could be used to detect bank deposits that are recorded but never made?

An organization's directors, management, external auditors, and internal auditors all play important roles in creating a proper control environment. Senior management is primarily responsible for:

Many organizations use electronic funds transfer (EFT) to pay their supplier instead of issuing checks. Regarding the risk associated with issuing checks, which of the following risk management techniques does this represent?

All of the following pertains to importance of Risk Management except for:

When Wells Fargo detected unauthorized accounts being opened by employees to meet aggressive sales targets, all of the following guidelines in COSO framework helped the company to prevent this incident in the future, except for?

Which of the following defines the function of governing body?

The first line in the Risk Management Three-Lines Model is often composed of:

All of the following are examples of KPI for e-commerce industry except for:

Which of the following statements about Enterprise Risk Management is true?

In which of the following events best reflects the risk management technique of avoiding risks?

If you were the risk manager of the World Trade Center buildings, what loss prevention or risk management technique could you have implemented before the 9/11/01 tragedy that might have made a significant difference in the number of lives lost?

Which of the following is a true statement?

Internal auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of efficiency, effectiveness, and Internal control. This describes internal audit's role in:

Which of the following resolves bottlenecks?

Which of the following resolves issues related to consignment?

All of the following defines objective based approach of assessing risk except for:

All are part of the internal organization except:

The best option for risk response in all circumstances is to tolerate risk.

Legal and regulatory requirements is one of the considerations in tolerating risk.

Organizations always tolerate risks within their risk appetite without exceptions.

Normally, risks are accepted or tolerated after the consideration of some of the cost-effective controls.

Treating the risk is applied mostly in situations of high likelihood and low impact risk.

Risk of regulatory non-compliance is one of the risks which is normally tolerated.

Risk is normally tolerated if the expected benefit is lower than the estimated cost.

Investing your own money is one of the examples of tolerating financial loss.

Businesses avail property insurance to transfer financial risks of property damage to the insurance company.

Insurance is the main tool for hazard risk transfer and to a greater extent of control risk.

Terminating risk is applicable for high likelihood, high-impact risk.

The risk response for potential risk of overheating for automobile manufacturing is one of the examples for terminating risk.

The risk response to recall a batch of poisoned canned product is one of the examples of transferring risk.

When an organization cannot terminate a risk because the activity associated with the risk is fundamental to its operations, alternative measures would be necessary.

Substituting the process or activity is one of the approaches in tolerating risks.

Airlines adhere to international risk management standards due to vulnerability related to flight operations & safety protocols.

The overall approach in mitigating risk is usually set by middle managers.

Surveys distributed by the management team to employees is one of the examples of Quantitative assessments.

External audit is one of the effective methods of evaluating risk management performance.

ERM is a functionally driven approach to risk management.

Silo based approach is more process driven way to compose a risk management plan.

ERM is based on historical data rather than forecasted information.

Traditional risk management is based on historical data rather than forecasted information.

Forex swapping is one of the strategies that is transferring the risk without transferring the asset/liability.

Insurance is one of the strategies that is making third parties pay for losses without transferring the risk.

A well-diversified company has a higher risk of experiencing recession.

The risk of default is more when the financial assets are distributed over a number of issuers instead of locking in the same with a single issuer.

A software development company might identify the risk o potential delays in project timeliness due to their reliance on third party suppliers for software components. Despite knowing the risk, the company did not mitigate this risk due to higher cost compared to benefits. This instance is one of the real-life applications of tolerating risk.

An organization may also have the current level of risks beyond its comfort zone and its risk capacity.

Most credit departments of bank tolerate the risk of financial loss since these operations are potentially profitable.

Generally, organizations tolerate risks that are within and beyond their risk appetite.

Treating risk is normally done at inherent or current level so that when treatment measures have been put in place, the new current of target level will be acceptable.

Implementing safety protocols for construction workers is one of the action items for treating risks.

Terminating risk is mostly associated with high likelihood and low impact risk.

Avoiding risk is mostly associated with high likelihood and high impact risk.

Where an organization cannot terminate a risk because the activity associated with the risk is fundamental to its operations, alternative control measures are necessary.

In the context of avoiding risks, control measures may be a combination of risk treatment and risk avoidance.

In the context of avoiding risks, control measures may be a combination of risk treatment and risk transfer.

Hazard risk pertains to physical or environmental dangers that cannot be mitigated via safety measures, planning and regulations.

Opportunity risk pertains to potential loss of a chance to gain a positive outcome or benefit due to choosing one course of action over another.