WGU D368 ENTERPRISE RISK MANAGEMENT EXAM 140
QUESTIONS WITH VERIFIED ANSWERS 2025/2026
It has a higher risk tolerance. - CORRECT ANSWER A financial institution is willing
to offer loans to people and companies who do not qualify for loans from
competing financial institutions because of their low credit ratings. By doing so,
the institution takes on more credit risk than its competitors. How does this
financial institution compare with its competitors in terms of risk management?
By including a weighting for various black swan events in key risk indicators -
CORRECT ANSWER A company underwent a bankruptcy reorganization during a
pandemic because the company was unable to remain solvent. How should the
company account for black swan events in risk management in the future?
By building risk awareness into directors' performance goals - CORRECT ANSWER
A governmental department has noticed that oversight of contract allocations to
private contractors is increasingly failing audits. The heads of the governmental
department benefit financially when contracts are allocated, and the
organization's budget growth is dependent on a continued increase in contract
allocations. How should the organization adjust structurally to remedy this
compliance risk?
Add a secondary control procedure to the source of the breach - CORRECT
ANSWER A company has experienced a data breach that resulted in the
dissemination of trade secret information. Executives have diagnosed the source
of the breach to be human error and must update the company's risk mitigation
protocol. How should the company reduce its risk?
,Procurement cost risk - CORRECT ANSWER A wood furniture manufacturer has
created a risk management profile that specifies risk criteria for climate change.
Due to changing weather conditions, timber prices have risen and transport costs
increased, while consumer spending on durable home goods has decreased.
Which aspect of the risk management profile should the manufacturer adjust,
given this change?
Sufficiently punitive to prevent future offenses - CORRECT ANSWER A
pharmaceutical company violated the company's risk management protocols and
federal regulations regarding the advertising and promotion of pain medication.
This violation led to many patients facing physical ailments, dependency, or death.
What should the relationship be between court-imposed penalties and violations?
The company will be able to invest in more risky projects as the financial leverage
of the company has decreased. - CORRECT ANSWER A semiconductor
manufacturing company has been reducing the amount of debt it takes to fund its
capital structure. As a result, there is a reduction in debt service and risk from the
debt. Soon, the regulatory burden on the company is expected to decrease due to
a change in government policy. How will this affect the company's approach to
manage its risks going forward, assuming other factors affecting the company's
risk-taking capacity remain constant?
The company maintains a balanced risk management strategy. - CORRECT
ANSWER An organization operates in a highly competitive environment that is
continuously changing because of technological advancements and regulatory
changes. Despite market challenges, the management is tasked with innovating
and adapting while mitigating risks. Consequently, the management is assessing
employee risk tolerance and aligning company goals with market conditions. What
does this scenario reflect about the company's risk tolerance capacity?
,Risk driver - CORRECT ANSWER A pharmaceutical manufacturer is facing
production inefficiencies, quality control issues, and a loss of skilled employees to
competitors. Analysis reveals the company's outdated technology to be the
reason behind the company's decline. What does the use of outdated
manufacturing technology exemplify in this scenario?
Risk transfer - CORRECT ANSWER A shoe manufacturer faces frequent equipment
breakdowns, resulting in a significant increase in costs due to equipment
downtime. To address this, the company plans to purchase equipment breakdown
insurance this year. Which risk management strategy is the company
implementing?
Internal guidelines for accepting specific risks as well as overall risks - CORRECT
ANSWER A consumer products and packaging company is developing risk criteria
as procedural rules for analyzing and evaluating the significance of risk. What is
the key element that the company should consider?
Requiring regular internal audits and using consistent accounting methods -
CORRECT ANSWER Multiple subsidiaries report to a chief financial officer (CFO) of
a parent company and adopt international financial reporting standards (IFRS)
across reports but vary in using cash or accrual methods. The company's 10-K
statement shows revenue adjustments, resulting in the volatility of stock prices in
secondary markets. Which action should the chief risk officer (CRO) implement to
remedy the company's risk management problem?
Compare costs of noncompliance with financial benefits of meeting standards -
CORRECT ANSWER A board of directors noticed a company stock price has
declined, following low operational efficiency and frequent personnel turnover.
The board determines that the source of the error was a failure to adhere to
, safety regulations and wants to reevaluate the company's risk management plan.
What should the board of directors ask the chief financial officer to do to assist
with addressing this problem?
Residual risk after risk treatment implementation - CORRECT ANSWER A
multinational company has undergone a bankruptcy reorganization due to prior
mismanagement of risks that caused the company's insolvency. The company's
board of directors has hired a new chief risk officer (CRO) to handle ongoing
operations risk management. What is the priority for the CRO regarding ongoing
company operations?
Operating objectives - CORRECT ANSWER A company's chief financial officer (CFO)
is responsible for enterprise risk management in a small manufacturing business.
The CFO appropriates capital to crisis preparedness and is tasked with creating an
optimal budget for enterprise capital and risk management requirements. Which
aspect of the business should the CFO balance crisis preparedness costs against?
Periodic review by each business unit - CORRECT ANSWER An appliance company
produces several kinds of machines for home and industrial use and has an
overarching risk management document that encompasses all product lines. The
company wants to ensure that risk mitigation protocols are tailored to each
product's production. Which method of ongoing quality control for the company's
risk management document should the company implement?
Strategic adviser - CORRECT ANSWER A footwear and apparel manufacturing
company plans to launch a few new products in emerging Asian markets. The
board has tasked the chief risk officer (CRO) with assessing the emerging risks and
strategic and operational uncertainties that cannot be quantified. Which role is
the CRO playing in this scenario?
QUESTIONS WITH VERIFIED ANSWERS 2025/2026
It has a higher risk tolerance. - CORRECT ANSWER A financial institution is willing
to offer loans to people and companies who do not qualify for loans from
competing financial institutions because of their low credit ratings. By doing so,
the institution takes on more credit risk than its competitors. How does this
financial institution compare with its competitors in terms of risk management?
By including a weighting for various black swan events in key risk indicators -
CORRECT ANSWER A company underwent a bankruptcy reorganization during a
pandemic because the company was unable to remain solvent. How should the
company account for black swan events in risk management in the future?
By building risk awareness into directors' performance goals - CORRECT ANSWER
A governmental department has noticed that oversight of contract allocations to
private contractors is increasingly failing audits. The heads of the governmental
department benefit financially when contracts are allocated, and the
organization's budget growth is dependent on a continued increase in contract
allocations. How should the organization adjust structurally to remedy this
compliance risk?
Add a secondary control procedure to the source of the breach - CORRECT
ANSWER A company has experienced a data breach that resulted in the
dissemination of trade secret information. Executives have diagnosed the source
of the breach to be human error and must update the company's risk mitigation
protocol. How should the company reduce its risk?
,Procurement cost risk - CORRECT ANSWER A wood furniture manufacturer has
created a risk management profile that specifies risk criteria for climate change.
Due to changing weather conditions, timber prices have risen and transport costs
increased, while consumer spending on durable home goods has decreased.
Which aspect of the risk management profile should the manufacturer adjust,
given this change?
Sufficiently punitive to prevent future offenses - CORRECT ANSWER A
pharmaceutical company violated the company's risk management protocols and
federal regulations regarding the advertising and promotion of pain medication.
This violation led to many patients facing physical ailments, dependency, or death.
What should the relationship be between court-imposed penalties and violations?
The company will be able to invest in more risky projects as the financial leverage
of the company has decreased. - CORRECT ANSWER A semiconductor
manufacturing company has been reducing the amount of debt it takes to fund its
capital structure. As a result, there is a reduction in debt service and risk from the
debt. Soon, the regulatory burden on the company is expected to decrease due to
a change in government policy. How will this affect the company's approach to
manage its risks going forward, assuming other factors affecting the company's
risk-taking capacity remain constant?
The company maintains a balanced risk management strategy. - CORRECT
ANSWER An organization operates in a highly competitive environment that is
continuously changing because of technological advancements and regulatory
changes. Despite market challenges, the management is tasked with innovating
and adapting while mitigating risks. Consequently, the management is assessing
employee risk tolerance and aligning company goals with market conditions. What
does this scenario reflect about the company's risk tolerance capacity?
,Risk driver - CORRECT ANSWER A pharmaceutical manufacturer is facing
production inefficiencies, quality control issues, and a loss of skilled employees to
competitors. Analysis reveals the company's outdated technology to be the
reason behind the company's decline. What does the use of outdated
manufacturing technology exemplify in this scenario?
Risk transfer - CORRECT ANSWER A shoe manufacturer faces frequent equipment
breakdowns, resulting in a significant increase in costs due to equipment
downtime. To address this, the company plans to purchase equipment breakdown
insurance this year. Which risk management strategy is the company
implementing?
Internal guidelines for accepting specific risks as well as overall risks - CORRECT
ANSWER A consumer products and packaging company is developing risk criteria
as procedural rules for analyzing and evaluating the significance of risk. What is
the key element that the company should consider?
Requiring regular internal audits and using consistent accounting methods -
CORRECT ANSWER Multiple subsidiaries report to a chief financial officer (CFO) of
a parent company and adopt international financial reporting standards (IFRS)
across reports but vary in using cash or accrual methods. The company's 10-K
statement shows revenue adjustments, resulting in the volatility of stock prices in
secondary markets. Which action should the chief risk officer (CRO) implement to
remedy the company's risk management problem?
Compare costs of noncompliance with financial benefits of meeting standards -
CORRECT ANSWER A board of directors noticed a company stock price has
declined, following low operational efficiency and frequent personnel turnover.
The board determines that the source of the error was a failure to adhere to
, safety regulations and wants to reevaluate the company's risk management plan.
What should the board of directors ask the chief financial officer to do to assist
with addressing this problem?
Residual risk after risk treatment implementation - CORRECT ANSWER A
multinational company has undergone a bankruptcy reorganization due to prior
mismanagement of risks that caused the company's insolvency. The company's
board of directors has hired a new chief risk officer (CRO) to handle ongoing
operations risk management. What is the priority for the CRO regarding ongoing
company operations?
Operating objectives - CORRECT ANSWER A company's chief financial officer (CFO)
is responsible for enterprise risk management in a small manufacturing business.
The CFO appropriates capital to crisis preparedness and is tasked with creating an
optimal budget for enterprise capital and risk management requirements. Which
aspect of the business should the CFO balance crisis preparedness costs against?
Periodic review by each business unit - CORRECT ANSWER An appliance company
produces several kinds of machines for home and industrial use and has an
overarching risk management document that encompasses all product lines. The
company wants to ensure that risk mitigation protocols are tailored to each
product's production. Which method of ongoing quality control for the company's
risk management document should the company implement?
Strategic adviser - CORRECT ANSWER A footwear and apparel manufacturing
company plans to launch a few new products in emerging Asian markets. The
board has tasked the chief risk officer (CRO) with assessing the emerging risks and
strategic and operational uncertainties that cannot be quantified. Which role is
the CRO playing in this scenario?
