Risk Management and GRC Concepts

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Questions and Answers

What does the term 'GRC' primarily encompass?

General reporting and control

Governance, Risk, and Compliance (correct)

Growth, revenue, and capital

Governmental regulations, resource allocation, and corporate strategies

In the context of risk management, what does the term 'vulnerability' refer to?

The likelihood of a threat exploiting a weakness

The potential negative impact of a realized threat

A weakness that an attacker can exploit to cause harm (correct)

The strategies to mitigate potential risks

Which of the following best describes a 'threat' in the context of risk?

The level of acceptable risk

A deliberate attempt to damage or disrupt a system (correct)

A weakness that could be exploited to breach a system

The potential harm resulting from a realized vulnerability

What does a 'risk classification system' primarily facilitate?

Categorizing different risks enabling better management strategies. (A) Signup and view all the answers

What was a primary challenge that the ABC Bank of India faced regarding risk management?

A manually operated risk management system with a lack of real-time data (A) Signup and view all the answers

In the context of GRC, what is 'compliance' primarily focused on?

Ensuring adherence to laws, regulations, and standards (B) Signup and view all the answers

According to the provided chapter overview, what is directly linked to the concept of 'assets?'

Vulnerability (B) Signup and view all the answers

What does the framework suggest about managing risk?

Risk management involves understanding and strategizing risks. (C) Signup and view all the answers

What is the primary distinguishing factor between a computer virus and a worm?

Viruses need a host program to infect, while worms are standalone programs. (A) Signup and view all the answers

Which malware type disguises itself as a legitimate application to trick users into launching and executing malicious code?

Trojan Horse (C) Signup and view all the answers

A rootkit's existence is primarily characterised by its capability to do what?

Modify existing programs to conceal an attack. (B) Signup and view all the answers

How does a computer virus typically spread?

By attaching itself to a host program and replicating when the host is shared. (B) Signup and view all the answers

If a malicious program replicates itself across a network without any user intervention, which category of malware is most likely to be the culprit?

Worm (B) Signup and view all the answers

What is the chief purpose of a Trojan Horse?

To appear as a desirable application in order to execute malicious commands. (D) Signup and view all the answers

What is the primary risk if a rootkit is installed on a computer?

The attacker can use it to mask their intrusion and remain undetected. (C) Signup and view all the answers

Which malware type can embed malicious code inside the boot instructions of a computer?

Rootkit (C) Signup and view all the answers

What is the primary purpose of implementing a risk management process within a company?

To create a strategic framework for identifying, measuring, and managing risks. (A) Signup and view all the answers

Why might a company not implement controls to counter every identified risk?

Some risks are so minor that the cost of control would be disproportionate to the potential impact. (A) Signup and view all the answers

In the context of risk management, what does 'risk transference' involve?

Delegating responsibility for a risk to a third party. (A) Signup and view all the answers

How does outsourcing IT infrastructure management serve as a risk mitigation strategy?

It shifts the burden of managing those risks to a provider with more specialized skills. (C) Signup and view all the answers

What should be the primary consideration when determining the implementation of a risk control?

The cost of control should be less than or equal to the potential impact of the risk. (C) Signup and view all the answers

After risk appetite has been defined and risk exposure identified, what key step follows in the risk management process?

Developing strategies for managing the identified risks and clarifying responsibilities. (B) Signup and view all the answers

Which of the following best describes the '4 T's' of risk management?

Transfer, Share, Tolerate, and Treat. (C) Signup and view all the answers

How can risk insights aid an organization's strategic position?

By enabling companies to leverage favorable market conditions and mitigate negative impacts. (C) Signup and view all the answers

Which scenario best illustrates the relationship between a threat, vulnerability and risk?

A software bug (vulnerability) is exploited by a hacker (threat), resulting in financial loss (risk). (C) Signup and view all the answers

In the context of cybersecurity, what best represents the concept of a vulnerability?

A weakness or flaw in a design or code that could be exploited. (B) Signup and view all the answers

Consider a port on a server being flooded with traffic. Which statement best describes how the impact of such an attack can be assessed?

The impact depends on whether the port supports a critical resource or not, such as user access. (C) Signup and view all the answers

Which of the following best demonstrates a proactive measure to reduce risk associated with a potential cybersecurity threat?

Ensuring all software and systems are regularly updated to address known vulnerabilities. (C) Signup and view all the answers

How is the risk of a negative event best defined in the context of the document?

The possibility that a vulnerability might be exploited by a threat to result in damage. (C) Signup and view all the answers

In the given model of risk, what does 'threat' primarily represent?

A potential action that could damage an asset. (A) Signup and view all the answers

Which of these statements about threats is most accurate?

Threats cannot be fully eliminated; however their impact can be reduced. (B) Signup and view all the answers

Given the document, what does it suggest is the primary method for decreasing the risk of a cybersecurity attack?

Reducing vulnerabilities by patching and configuring systems properly. (D) Signup and view all the answers

Which component of ERM focuses on the standards, processes, and structures that underpin internal control across an organization?

Control Environment (D) Signup and view all the answers

What is the primary role of the Board of Directors and Senior Management in the context of the Control Environment?

To set the tone at the top regarding internal control and ethical conduct. (B) Signup and view all the answers

Which element is NOT typically considered a part of the Control Environment?

The specific procedures surrounding control activities. (C) Signup and view all the answers

What impact does the Control Environment have on the overall system of internal control?

It has a pervasive impact, influencing the entire system of internal control. (A) Signup and view all the answers

In the context of Risk Assessment, what is the definition of 'risk'?

The possibility that an event will occur and adversely affect the achievement of objectives. (C) Signup and view all the answers

What is the relationship between Risk Assessment and the management of risk?

Risk Assessment forms the basis for determining how risks will be managed. (B) Signup and view all the answers

What is a precondition to effective Risk Assessment for an organization?

The establishment of clear objectives linked at different levels of the entity. (C) Signup and view all the answers

Management specifies objectives within which categories for the purposes of identifying risks?

Operations, reporting, and compliance. (B) Signup and view all the answers

What is the primary purpose of risk assessment in the context of internal control?

To consider the impact of potential changes in external and internal factors. (B) Signup and view all the answers

What aspect of control activities is highlighted in managing risks associated with business processes?

Control activities should be comprehensive and involve all levels of management. (A) Signup and view all the answers

Which of the following best describes control activities?

They are actions established through formal policies and procedures. (B) Signup and view all the answers

In terms of risk assessment, identifying threats and vulnerabilities is crucial for understanding what?

The potential impact of a loss of Confidentiality, Integrity, and Availability (CIA). (A) Signup and view all the answers

What role does technology play in enhancing business performance according to the content?

Technology improves efficiency and security while providing a competitive edge. (C) Signup and view all the answers

Which type of checks do control activities encompass?

Independent checks on performance and valuation of records. (D) Signup and view all the answers

What is a key consideration for organizations regarding the mitigation of risks?

It is unrealistic to expect total risk elimination. (D) Signup and view all the answers

Why is information considered essential for internal control responsibilities?

Information supports the achievement of objectives and control responsibilities. (C) Signup and view all the answers

Study Notes

Governance, Risk, and Compliance (GRC) Framework

GRC is an organizational strategy for managing governance, risk management, and compliance with industry and government regulations
GRC provides a structured approach to aligning IT with business objectives
GRC helps companies effectively manage IT and security risks, reduce costs, and improve decision-making and performance
Governance is setting direction (strategy and policy), monitoring performance and controls, and evaluating outcomes
Risk is an event that could possibly cause harm
Compliance is ensuring that appropriate guidelines and consistent accounting practices are followed

Chapter Overview

ABC Bank of India is a bank with a board of directors and deputy governors.
Risk Management at ABC Bank was manual and siloed, leading to inconsistencies
Internal audit at ABC Bank was non-standard and used multiple spreadsheets
Compliance management at ABC Bank was manual.

GRC Processes

Document processes and risks
Define and document controls
Assess effectiveness of controls
Disclosure and certification of compliance processes
Remediate issues

Risk Fundamentals

Assets are things of value to the organization
Assets have characteristics like being valuable, hard to replace, and part of the organization's identity
Customer data (e.g., name, address, phone, Aadhaar number) and protected health care information are examples

Levels of Risk

Inherent risk is the level of risk before any actions have been taken
Current/Residual risk is the level of risk after control measures have been put in place
Target risk is the desired level of risk

Types of Risks

Compliance risks - risks to fines and penalties from regulatory agencies
Hazard (or Pure) Risks - risk of harm or potentially undermining objectives
Control (or Uncertainty) Risks - risk associated with unknown and unexpected events
Opportunity (or Speculative) Risks - risks with and without action

Malicious Attacks

Active attacks modify or replace programs to conceal, hide, or spread, or to gain control
- examples: Brute-force Password Attacks, Dictionary Password Attacks
- examples: IP Address Spoofing, Masquerading, Phishing
Passive attacks monitor transmissions, such as eavesdropping
examples: Hijacking Session Hijacking, Replay Attacks
examples: Eavesdropping, Phreaking, Pharming

Malicious Software

Malware is software used to damage, disrupt, or steal data
- examples: Viruses, Worms, Trojan Horses, Rootkits, Spyware

Countermeasures

A countermeasure is an action, device, procedure or technique to prevent, avert or reduce possible threats to computer systems
Examples include anti-virus software and firewalls.

Internal Controls

Internal controls are the policies and procedures to ensure the reliability of internal and external financial reporting, compliance with laws and regulations, and safeguarding of assets.
Internal controls have five components
The control environment, ensures the tone at the top
Risk Assessment
Control Activities
Information & Communication
Monitoring Activities

Studying That Suits You

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Description

Test your understanding of key concepts in Governance, Risk, and Compliance (GRC) and risk management. This quiz covers definitions, classifications, and challenges related to risk and vulnerabilities, alongside an examination of different malware types. Assess your knowledge on how these elements interplay in risk assessment and management.