Podcast Beta
Questions and Answers
What is the characteristic of uncontrollable risks?
What is the relationship between positive risks?
What does a correlation coefficient close to +1 indicate?
Which type of risks do not usually have a direct financial impact on the business?
Signup and view all the answers
Which type of risk is related to the long-term effect of key strategic decisions?
Signup and view all the answers
What is the main characteristic of operational risks?
Signup and view all the answers
What is the fundamental concept of risk?
Signup and view all the answers
How is risk typically measured?
Signup and view all the answers
What does the formula 'RISK = HAZARD x EXPOSURE' imply?
Signup and view all the answers
What is a hazard?
Signup and view all the answers
What distinguishes natural hazards from human-caused hazards?
Signup and view all the answers
Which statement best describes uncertainty?
Signup and view all the answers
Which of the following is an example of an external environmental factor that can impact an organization's operations?
Signup and view all the answers
What does the term 'IMPLI' in the text indicate?
Signup and view all the answers
Which of the following is an example of a technological external factor that can impact an organization's operations?
Signup and view all the answers
Which of the following is a factor to consider when assessing the relevance of a risk to an organization's strategy or business objectives?
Signup and view all the answers
Which of the following is an example of a personnel external factor that can impact an organization's operations?
Signup and view all the answers
What is the purpose of the 'risk analysis' stage described in the text?
Signup and view all the answers
What is the first component of the COSO 2017 ERM Framework?
Signup and view all the answers
Which component of the COSO 2017 ERM Framework deals with identifying, assessing, and responding to risks?
Signup and view all the answers
Which of the following is NOT a principle within the Strategy and Objective-Setting component?
Signup and view all the answers
What does the acronym 'FADE' stand for in the COSO 2017 ERM Framework?
Signup and view all the answers
Which principle within the Performance component is concerned with developing a portfolio view of risk?
Signup and view all the answers
What does the acronym 'RAP' stand for in the COSO 2017 ERM Framework?
Signup and view all the answers
What is fraud commonly perpetrated through?
Signup and view all the answers
Which of the following is NOT a commonly used standard in managing risk?
Signup and view all the answers
Which of the following is an example of how corruption can spread within an organization's network?
Signup and view all the answers
What is the primary objective of risk management?
Signup and view all the answers
Study Notes
Concepts of Risk
- Risk is the combination of the probability of occurrence of harm and the severity of that harm.
- Risk is the possibility of an event occurring that will have an impact on the achievement of objectives.
- Risk is measured in terms of impact and likelihood.
- Risk can be positive or negative, and it is a deviation from expectations.
Hazard vs. Risk
- Hazard is a source of potential harm or danger.
- Hazard is qualified in order to define the origin of the hazard or the nature of the expected harm.
- Hazard may remain the same even if the risk is minimized.
- Risk is the possibility that harms or injury might occur when exposed to a hazard.
- Risk can be eliminated by identifying the hazard and the potential harm it can cause.
Types of Hazards
- Natural hazards (MBG):
- Geological (e.g. earthquake, tsunami, landslide)
- Meteorological (e.g. floods, storms, wildfire)
- Biological (e.g. pandemic diseases)
- Human-caused hazards (AI):
- Accidental (e.g. chemical spills, release of flammable corrosives)
- Intentional (e.g. terrorist attack)
Uncertainty vs. Implication
- Uncertainty refers to external factors that can affect the organization, such as changes in market conditions or government regulations.
- Implication refers to the potential impact of uncertainty on the organization's objectives.
Risk Analysis
- Risk analysis is the process of identifying and assessing risks that could impact the organization's objectives.
- Factors to consider in risk analysis include:
- Likelihood of events and consequences
- Nature and magnitude of consequences
- Complexity and connectivity
- Time-related factors and volatility
- Effectiveness of existing controls
- Sensitivity and confidence levels
Categories of Risks
- Based on correlation:
- Positive risks (direct correlation)
- Negative risks (inverse correlation)
- Based on impact:
- Financial risks (direct financial impact)
- Non-financial risks (no direct financial impact)
- Based on drivers:
- Operational risks (relate to day-to-day business operations)
- Strategic risks (relate to business strategy and objectives)
Risk Management Process
- The risk management process involves:
- Identifying risks
- Assessing the severity of risks
- Prioritizing risks
- Implementing risk response
- Developing a portfolio view
- Reviewing and revising the risk management process
Components of COSO 2017 ERM
- Governance and culture
- Strategy and objective-setting
- Performance
- Review and revision
- Information, communication, and reporting
Coso 2017 ERM - Integrating with Strategy and Performance
- SIR-PG: Strategy-Informed Risk Management-Performance Governance
- Examples of risks include:
- Corruption risk
- Environmental risk
- Reputation risk
- Fraud risk
- Probity risk
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Learn about the fundamental concepts of risk, including the effect of uncertainty on objectives, probability of harm occurrence, and impact on achievement of objectives. Explore the difference between hazard as a source of potential harm and risk as the possibility of an event with impact.
