WGU QUIZ 1 RISK MANAGEMENT 51 QUESTIONS
WITH VERIFIED ANSWERS 2025/2026
Captures potential deviation from expected outcomes that may affect business
achievement and can be quantified by observers - CORRECT ANSWER Risk
1) Reduces costs from financial distress
2) Reduces risk exposure from those who cannot leave the firm - CORRECT
ANSWER Why Manage/Mitigate Risks?
Goal is to BALANCE RISKS in order to achieve a level of risk that maximizes
shareholder VALUE.....done so through leveraging some risks and mitigating
others - CORRECT ANSWER Why Use ERM?
Implementing processes that allow...
-proper IDENTIFICATION/ASSESSING, MANAGING, and MONITORING of risks
and
-are combined with appropriate SYSTEMS AND GOVERNANCE to MITIGATE
undesirable risks
***NO RISKS=NO REWARDS - CORRECT ANSWER Enterprise Risk Management
ERM
-Increases range of opportunities for the firm
-Identifies and manages the firm's risks
,-Increases positive outcomes
-Decreases negative outcomes
-Reduces performance variability
-Improves resource development
-Enhances enterprise resilience - CORRECT ANSWER Benefits ERM
Risks arising with no strategic benefits or shareholder value, which would cost the
firm money
EX) Employee Fraud - CORRECT ANSWER Preventable Risks
Risks taken that create strategic benefits and shareholder value
EX) Firm Expansion - CORRECT ANSWER Strategic Risks
Risks outside the firm beyond its influence/control
EX) Natural Disaster - CORRECT ANSWER External Risks
Applying the ERM COMPONENTS (front) to the AREAS OF RISK (top) across LEVELS
OF THE ORGANIZATION (side) - CORRECT ANSWER COSO Cube
1) Governance and Culture
2) Strategy and Objective Setting
3) Performance
4) Review and Revision
, 5) Information, Communication, Reporting - CORRECT ANSWER As we think about
the focused framework of COSO and our class model of working through ERM,
please list the 5 key components of the framework:
The total amount of risk a firm is ABLE TO BEAR - CORRECT ANSWER Risk Capacity
The amount of risk a firm is WILLING TO BEAR - CORRECT ANSWER Risk Appetite
Willing to accept higher levels of risk for higher levels of return, usually more
focused on significant increases in value and earnings - CORRECT ANSWER Higher
Risk Appetite
NOT willing to accept high levels of risk... anti risks and focused on stable growth
and earnings - CORRECT ANSWER Lower Risk Appetite
1) Quantitative and Qualitative Foundation
2) Relevance For Large Group Stakeholders
3) Connections to Key Decision Making Processes Across Firm - CORRECT ANSWER
Risk Appetite Statement Structure
-Linked to firms objective and drivers of firm value
-Stated clearly with sufficient precision
-Determines acceptable risk tolerances
-Facilitates alignment of people, processes, and infrastructure
WITH VERIFIED ANSWERS 2025/2026
Captures potential deviation from expected outcomes that may affect business
achievement and can be quantified by observers - CORRECT ANSWER Risk
1) Reduces costs from financial distress
2) Reduces risk exposure from those who cannot leave the firm - CORRECT
ANSWER Why Manage/Mitigate Risks?
Goal is to BALANCE RISKS in order to achieve a level of risk that maximizes
shareholder VALUE.....done so through leveraging some risks and mitigating
others - CORRECT ANSWER Why Use ERM?
Implementing processes that allow...
-proper IDENTIFICATION/ASSESSING, MANAGING, and MONITORING of risks
and
-are combined with appropriate SYSTEMS AND GOVERNANCE to MITIGATE
undesirable risks
***NO RISKS=NO REWARDS - CORRECT ANSWER Enterprise Risk Management
ERM
-Increases range of opportunities for the firm
-Identifies and manages the firm's risks
,-Increases positive outcomes
-Decreases negative outcomes
-Reduces performance variability
-Improves resource development
-Enhances enterprise resilience - CORRECT ANSWER Benefits ERM
Risks arising with no strategic benefits or shareholder value, which would cost the
firm money
EX) Employee Fraud - CORRECT ANSWER Preventable Risks
Risks taken that create strategic benefits and shareholder value
EX) Firm Expansion - CORRECT ANSWER Strategic Risks
Risks outside the firm beyond its influence/control
EX) Natural Disaster - CORRECT ANSWER External Risks
Applying the ERM COMPONENTS (front) to the AREAS OF RISK (top) across LEVELS
OF THE ORGANIZATION (side) - CORRECT ANSWER COSO Cube
1) Governance and Culture
2) Strategy and Objective Setting
3) Performance
4) Review and Revision
, 5) Information, Communication, Reporting - CORRECT ANSWER As we think about
the focused framework of COSO and our class model of working through ERM,
please list the 5 key components of the framework:
The total amount of risk a firm is ABLE TO BEAR - CORRECT ANSWER Risk Capacity
The amount of risk a firm is WILLING TO BEAR - CORRECT ANSWER Risk Appetite
Willing to accept higher levels of risk for higher levels of return, usually more
focused on significant increases in value and earnings - CORRECT ANSWER Higher
Risk Appetite
NOT willing to accept high levels of risk... anti risks and focused on stable growth
and earnings - CORRECT ANSWER Lower Risk Appetite
1) Quantitative and Qualitative Foundation
2) Relevance For Large Group Stakeholders
3) Connections to Key Decision Making Processes Across Firm - CORRECT ANSWER
Risk Appetite Statement Structure
-Linked to firms objective and drivers of firm value
-Stated clearly with sufficient precision
-Determines acceptable risk tolerances
-Facilitates alignment of people, processes, and infrastructure
