ENTERPRISE RISK MANAGEMENT QUESTIONS WITH
ACCURATE ANSWERS
analyze risks (ERM process) correct answer risk analysis focuses on the causes of
risks, their likelihood, and their consequences
Classification of Diversifiable risk correct answer a risk that affects only some
individuals, businesses, or small groups
Classification of Nondiversifiable risk correct answer a risk that affects a large
segment of society at the same time
Classification of Objective risk correct answer the measurable variation in
uncertain outcomes based on facts and data
Classification of Pure Risk correct answer A chance of loss or no loss, but no
chance of gain
Classification of quadrant risk, financial correct answer arise from the effect of
market forces on financial assets or liabilities and include market risk, credit risk,
liquidity risk, and price risk
Classification of quadrant risk, hazard correct answer arise from property, liability,
or personnel loss exposures and are generally the subject of insurance
Classification of quadrant risk, operational correct answer fall outside the hazard
risk category and arise from people or a failure in processes, systems, or controls,
including those involving information technology
, Classification of quadrant risk, strategic correct answer arise from trends in the
economy and society, including changes in the economic, political, and
competitive environments, as well as from demographic shifts
Classification of Speculative Risk correct answer a chance of loss, no loss, or gain
Classification of Subjective risk correct answer the perceived amount of risk based
on an individual's or organization's opinion
Commonly used classifications of risks correct answer - pure and speculative risk
- subjective and objective risk
- diversifiable and nondiversifiable risk
- quadrants of risk (hazard, operational, financial, and strategic)
control activites correct answer policies and procedures that are established and
implemented to understand where processes and controls are necessary, as well
as where improvement is needed
COSO ERM correct answer integrated framework that is designed to help an
organization achieve its objectives in four categories:
- strategic
- operations
- reporting
- compliance
ACCURATE ANSWERS
analyze risks (ERM process) correct answer risk analysis focuses on the causes of
risks, their likelihood, and their consequences
Classification of Diversifiable risk correct answer a risk that affects only some
individuals, businesses, or small groups
Classification of Nondiversifiable risk correct answer a risk that affects a large
segment of society at the same time
Classification of Objective risk correct answer the measurable variation in
uncertain outcomes based on facts and data
Classification of Pure Risk correct answer A chance of loss or no loss, but no
chance of gain
Classification of quadrant risk, financial correct answer arise from the effect of
market forces on financial assets or liabilities and include market risk, credit risk,
liquidity risk, and price risk
Classification of quadrant risk, hazard correct answer arise from property, liability,
or personnel loss exposures and are generally the subject of insurance
Classification of quadrant risk, operational correct answer fall outside the hazard
risk category and arise from people or a failure in processes, systems, or controls,
including those involving information technology
, Classification of quadrant risk, strategic correct answer arise from trends in the
economy and society, including changes in the economic, political, and
competitive environments, as well as from demographic shifts
Classification of Speculative Risk correct answer a chance of loss, no loss, or gain
Classification of Subjective risk correct answer the perceived amount of risk based
on an individual's or organization's opinion
Commonly used classifications of risks correct answer - pure and speculative risk
- subjective and objective risk
- diversifiable and nondiversifiable risk
- quadrants of risk (hazard, operational, financial, and strategic)
control activites correct answer policies and procedures that are established and
implemented to understand where processes and controls are necessary, as well
as where improvement is needed
COSO ERM correct answer integrated framework that is designed to help an
organization achieve its objectives in four categories:
- strategic
- operations
- reporting
- compliance
