Unit 2: Risk Governance and Management (easy-del)
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Questions and Answers

What is the responsibility of the board of directors in most enterprises?

  • Delegating governance responsibilities
  • Creating value for stakeholders
  • Monitoring performance and compliance (correct)
  • Setting direction through decision making

    • What is the objective of any governance system according to the text?

  • Maximizing profits
  • Expanding the enterprise globally
  • Creating value for stakeholders (correct)
  • Minimizing risks

    • What does benefits realization consist of according to the text?

  • Creating value for the enterprise through I&T (correct)
  • Eliminating all IT initiatives and assets
  • Promoting risk optimization
  • Optimizing resource utilization

    • What are the basic principles of I&T value mentioned in the text?

    <p>Delivery of fit-for-purpose services and solutions, on time and within budget</p> Signup and view all the answers

    What does it mean for I&T-related risk to be treated as a business risk?

    <p>It is treated as a comprehensive and cross-functional risk.</p> Signup and view all the answers

    How does effective enterprise governance align I&T-related risk management with overall enterprise risk management?

    <p>By clearly defining business or mission objectives and risk appetite.</p> Signup and view all the answers

    How does the effective management of I&T-related risk promote ethical and open communication?

    <p>By freely exchanging open, accurate, timely, and transparent information on I&amp;T-related risk.</p> Signup and view all the answers

    What characterizes the tone at the top for the effective management of I&T-related risk?

    <p>Engagement of business owners, the board of directors, and executive leadership in risk management.</p> Signup and view all the answers

    What is promoted by the effective management of I&T-related risk in terms of personal responsibility?

    <p>Promotion of personal responsibility and engagement with risk-aware culture.</p> Signup and view all the answers

    What does the effective management of I&T-related risk promote as part of daily activities?

    <p>Consistent approach to key processes identification and associated risks monitoring.</p> Signup and view all the answers

    What is the objective of IT risk management?

    <p>Preserving value and integrating into enterprise risk management activities</p> Signup and view all the answers

    What does Resource Optimization ensure?

    <p>Effective resources and data exploitation</p> Signup and view all the answers

    What does Risk Governance do?

    <p>Sets the direction and strategy for risk management</p> Signup and view all the answers

    What does Effective risk governance establish?

    <p>Integration of risk management into the enterprise</p> Signup and view all the answers

    What do managers need for effective risk management?

    <p>Accurate information</p> Signup and view all the answers

    What is the implementation of I&T Risk Governance based on?

    <p>Enterprise management's culture, appetite, and tolerance levels</p> Signup and view all the answers

    What does an effective I&T risk management strategy connect I&T-related risk to?

    <p>Business or mission objectives</p> Signup and view all the answers

    Why is a consistent approach to I&T risk management crucial?

    <p>It is integrated into daily activities</p> Signup and view all the answers

    What should effective risk management consider?

    <p>Various factors including enterprise dependencies, risks from economic, political changes, and possible natural disasters</p> Signup and view all the answers

    What is the primary purpose of defining the risk universe in managing I&T-related risk?

    <p>To encompass the overall risk environment</p> Signup and view all the answers

    What does the risk universe aim to describe according to the text?

    <p>The I&amp;T components, processes, assets, and infrastructure that support the business and mission objectives</p> Signup and view all the answers

    What does the value chain encompass in relation to I&T-related business activities?

    <p>Transformation programs, investments, projects, and operations</p> Signup and view all the answers

    What does effective enterprise governance of I&T-related risk prioritize and address?

    <p>Risk appetite and risk tolerance in line with overall enterprise risk management</p> Signup and view all the answers

    Which policy manages risk linked to projects and programs, detailing management positions and expectations?

    <p>Program/project management policy</p> Signup and view all the answers

    Which policy outlines expectations from employees and acceptable/unacceptable behavior, managing risks linked to human behavior?

    <p>Human resources (HR) policies</p> Signup and view all the answers

    Which policy details management vision on quality objectives, acceptable quality levels, and duties of specific departments?

    <p>Quality management policy</p> Signup and view all the answers

    Which policy ensures effective management of information technology services and related risks?

    <p>Service management policy</p> Signup and view all the answers

    Which policy protects the enterprise from fraud incidents, guiding employees on reporting suspicious activity?

    <p>Fraud risk policy</p> Signup and view all the answers

    What does risk scope allow in terms of risk management activities?

    <p>All of the above</p> Signup and view all the answers

    What does the scoping activity for enterprise I&T-related risk involve?

    <p>All of the above</p> Signup and view all the answers

    What does the risk management workflow include?

    <p>All of the above</p> Signup and view all the answers

    What does the assessment of I&T-related risk involve?

    <p>Assessing frequency, impact, and business consequences</p> Signup and view all the answers

    What is one of the primary objectives of the enterprise risk scope?

    <p>Prioritization of more detailed risk management activities</p> Signup and view all the answers

    What should an enterprise I&T-related risk scoping exercise involve?

    <p>Involvement of all major stakeholders of the enterprise</p> Signup and view all the answers

    What is essential for an enterprise I&T-related risk scoping exercise?

    <p>Collecting data on impact criteria and current risk profiles</p> Signup and view all the answers

    What describes the interaction between three lines of defense and associated risk management roles?

    <p>Risk Roles and Responsibilities Matrix (RRRM)</p> Signup and view all the answers

    Which senior official is responsible for digital initiatives?

    <p>Chief Digital Officer (CDO)</p> Signup and view all the answers

    What is responsible for collecting risk data in risk management?

    <p>Risk Professionals</p> Signup and view all the answers

    What is essential for successful risk management by bringing clarity and certainty?

    <p>Effective risk communication</p> Signup and view all the answers

    Which role is responsible for overseeing efforts in risk management?

    <p>Enterprise Risk Committee</p> Signup and view all the answers

    What does the RACI model define?

    <p>Roles and responsibilities in risk management</p> Signup and view all the answers

    What encompasses behaviors such as open communication and transparency?

    <p>Risk culture</p> Signup and view all the answers

    What provides insights into types of IT-related information to be shared and discussed in risk communication?

    <p>Figure 2.12</p> Signup and view all the answers

    What does senior management have defined roles in, including understanding business impact?

    <p>Risk culture</p> Signup and view all the answers

    What does effective risk communication bring clarity and certainty to?

    <p>Risk management</p> Signup and view all the answers

    What does Risk Governance prioritize and address in line with risk appetite and risk tolerance?

    <p>Business impact</p> Signup and view all the answers

    What is essential for successful risk management by enhancing decision-making by executive management and stakeholders?

    <p>Effective risk communication</p> Signup and view all the answers

    What is risk appetite?

    <p>The amount of risk an enterprise is willing to accept to achieve its objectives</p> Signup and view all the answers

    Who is responsible for financial management in an enterprise?

    <p>CFO</p> Signup and view all the answers

    What is the role of the board of directors in enterprise governance?

    <p>Accountable for overall enterprise governance and control</p> Signup and view all the answers

    Who determines IT's support for the business in an enterprise?

    <p>Business management</p> Signup and view all the answers

    What does the CIO of an enterprise do?

    <p>Responsible for aligning IT and business strategies</p> Signup and view all the answers

    What does risk tolerance refer to?

    <p>The acceptable level of variation in risk for the enterprise as it pursues its objectives</p> Signup and view all the answers

    Who is accountable for enterprise operation in an enterprise?

    <p>COO</p> Signup and view all the answers

    What is risk capacity in an enterprise?

    <p>The objective magnitude of loss an enterprise can tolerate without risking its continued existence</p> Signup and view all the answers

    'Stakeholders in I&T risk management include business management, who determine IT's support for their business' - Who are the stakeholders referred to in this statement?

    <p>'Various senior executives responsible for different areas of enterprise management and risk management'</p> Signup and view all the answers

    'The executive committee is a group of senior executives appointed by the board to ensure its involvement in major decisions' - What is the role of the executive committee in an enterprise?

    <p>'Accountable for ensuring the board's involvement in major decisions'</p> Signup and view all the answers

    'Stakeholders in I&T risk management include business management, who determine IT's support for their business' - Who determines IT's support for their business?

    <p>Business management</p> Signup and view all the answers

    What does risk communication in IT management aim to achieve?

    <p>Communicating risk events and their causes</p> Signup and view all the answers

    What is the primary purpose of establishing a risk policy, scope, and workflow?

    <p>To define the boundaries within which risk management activities operate</p> Signup and view all the answers

    What does the risk policy types include?

    <p>Core IT risk policy, information security policy, and crisis management policy</p> Signup and view all the answers

    What is a key function of risk communication about IT management for CFOs?

    <p>Improving understanding of risk significance in investment and portfolio management</p> Signup and view all the answers

    What is the significance of a comprehensive risk policy?

    <p>To provide a superior management framework with a hierarchical structure</p> Signup and view all the answers

    What is a key aspect of the risk policy types mentioned in the text?

    <p>Setting guidelines on how to act in crisis situations</p> Signup and view all the answers

    What does stakeholder communication about risk aim to achieve for IT security managers?

    <p>Provides clearer positioning of security risk among other IT-related risks</p> Signup and view all the answers

    What does Risk Policy Types do?

    <p>Defines how the risk of an enterprise needs to be governed and managed according to its business objectives (core IT risk policy)</p> Signup and view all the answers

    What is a key outcome of stakeholder communication about risk for external auditors?

    <p>Improves evaluation of enterprise risk management practices for external auditors</p> Signup and view all the answers

    What does the establishment of a foundation for managing risk across an enterprise include?

    <p>Defines the boundaries within which risk management activities operate (risk scope)</p> Signup and view all the answers

    Study Notes

    • IT value is not just about cost savings, but also the impact and contributions of IT investments in value creation process of the enterprise.

    • Risk Optimization: IT risk management is about preserving value, not impeding it, and should be integrated into enterprise risk management activities.

    • Resource Optimization: Ensures appropriate capabilities for executing strategic plans, provides effective resources, and focuses on data and information exploitation.

    • Risk Governance: Sets the direction and strategy for risk management, ensures risk-aware business decisions, and monitors risk management performance.

    • Effective risk governance establishes a common view of risk, integrates risk management into the enterprise, makes risk-aware business decisions, and ensures risk management controls are implemented and operating correctly.

    • Risk Management: Managers need accurate information to understand risks, mitigate negative outcomes, and make informed decisions. Effective risk management considers various factors, including enterprise dependencies, risks from economic, political changes, and possible natural disasters.

    • I&T Risk Governance and Management: The implementation of a risk strategy that reflects enterprise management's culture, appetite, and tolerance levels, considers technology and budgets, and addresses regulatory and compliance requirements.

    • An effective I&T risk management strategy connects I&T-related risk to business or mission objectives, aligns it with enterprise risk management when possible, balances costs and benefits, and promotes ethical and open communication.

    • A consistent approach to I&T risk management is crucial, integrated into daily activities, and aligned with the enterprise strategy.

    • Risk Communication Description:

    • Establishes the enterprise's strategy towards IT risk management (risk strategy, policies, procedures).

    • Monitors and predicts the state of risk management (status).

    • Offers solutions to manage risks effectively (options to mitigate risk).

    • Communicates risk events and their causes (event/loss data).

    • Stakeholder Communication About Risk:

    • Enhances understanding of IT risk management roles and responsibilities for various stakeholders.

    • Improves identification of key operational losses and risk indicators for operational risk managers.

    • Provides clearer positioning of security risk among other IT-related risks for IT security managers.

    • Enhances understanding of risk significance in investment and portfolio management for CFOs.

    • Supports informed monitoring and reviewing of IT governance roles for enterprise governance officers.

    • Improves understanding of operational IT-related risks for business managers.

    • Offers more effective risk assessment and management strategies for IT auditors.

    • Increases transparency and compliance understanding for regulators.

    • Improves evaluation of enterprise risk management practices for external auditors.

    • Provides clearer understanding of risk exposure for policy formulation for insurers.

    • Improves evaluation of enterprise risk management for rating agencies.

    • Enhances trust through transparent risk management practices for customers.

    • Increases awareness for informed decision-making for employees.

    • 2.5.2 Risk Policy, Scope, and Workflow:

    • Establishes a foundation for managing risk across an enterprise with a clear articulation of the enterprise's tolerance for risk (risk appetite), specific thresholds indicating acceptable risk levels (risk tolerance), structured processes for risk identification, assessment, and management (risk governance), defined mechanisms for reporting risks to relevant stakeholders (risk reporting), and ensuring alignment with legal and regulatory requirements (risk compliance).

    • Defines the boundaries within which risk management activities operate (risk scope), which includes aligning risk management with organizational goals, defining parameters and methodologies for assessing risk, involving relevant stakeholders in risk identification and mitigation, and outlining processes for recording and maintaining risk-related information.

    • Outlines the sequence of risk management activities, including recognizing potential risks that could affect objectives (risk identification), evaluating identified risks in terms of impact and likelihood (risk analysis), assessing the significance of risks against established criteria (risk evaluation), and selecting and implementing measures to mitigate, transfer, or accept risks (risk treatment).

    • Continuously oversees and reassesses risks over time (risk monitoring).

    • Policies should be comprehensive and provide a superior management framework, with a hierarchical structure and a focus on integrating risk management norms or conditions into the enterprise policy framework, including defining scope and authority, roles and responsibilities of stakeholders, consequences of failing to comply with the policy, and the means for handling exceptions.

    • Risk Policy Types:

    • Defines how the risk of an enterprise needs to be governed and managed according to its business objectives (core IT risk policy).

    • Sets behavioral guidelines in protecting corporate information and associated systems and infrastructure (information security policy).

    • Sets guidelines on how to act in crisis situations and details the sequence for dealing with risk areas (crisis management policy).

    • Manages risk related to third-party services (third-party IT service delivery management policy).

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    Description

    This quiz covers the fundamentals of risk governance and management, including the responsibilities of the board of directors and the role of governance in determining enterprise objectives, decision making, and compliance monitoring.

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