Operational Risk Management Quiz

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Questions and Answers

What is the primary goal of the Operational Risk Management process?

To improve technical skills of personnel
To anticipate hazards and reduce potential loss (correct)
To enhance financial reporting accuracy
To increase employee productivity

During which step of the Operational Risk Management process is the degree of risk evaluated?

Implementing controls
Identifying hazards
Making risk decisions
Assessing hazards (correct)

What should be prioritized when making risk decisions within the ORM process?

The least serious risks first
Risks that are easy to control
Risks that pose no immediate threat
The most serious risks first (correct)

What is the main purpose of the 'Implementing controls' step in ORM?

<p>To eliminate hazards or reduce risk levels (B)</p> Signup and view all the answers

What is a key focus during the 'Supervising' step of the Operational Risk Management process?

<p>Conducting follow-up evaluations of controls (A)</p> Signup and view all the answers

Flashcards

Operational Risk Management (ORM)

A decision-making tool used to enhance operational effectiveness by anticipating potential hazards and minimizing losses, thereby increasing mission success.

Identifying Hazards

Listing potential hazards within each operational step and pinpointing possible causes for those hazards.

Assessing Hazards

Evaluating the risk level associated with potential hazards based on probability and severity.

Making Risk Decisions

Prioritizing the most significant risks and selecting appropriate controls to minimize them, considering mission goals.

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Implementing Controls

Using measures to either eliminate hazards or decrease their associated risk.

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Study Notes

Operational Risk Management (ORM)

ORM is a decision-making tool for all levels to improve operational effectiveness.
It anticipates hazards and reduces potential losses, increasing mission success probability.
ORM enhances informed decision-making by providing a comprehensive knowledge base.
ORM minimizes risks to acceptable levels, aligning with mission requirements. Wartime risk tolerance is higher than peacetime.
ORM reduces mishaps, lowers costs, and optimizes resource use.