CRM PRINCIPLES OF RISK MANAGEMENT EXAM QUESTIONS WITH
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW 2025
Explain the impacts of an effective Risk Management program
on an organization (6) - CORRECT ANSWER - >1. protects
organization's reputation/brand
2. Increases profitability
3. Raises awareness of risk management
4. supports managerial objective
5. Improves morale and productivity
6. Improves quality, process and technology
Define Traditional Risk Management (TRM). - CORRECT
ANSWER - >a functional, siloed, view of risk affecting one or
more areas of the organization (focuses on pure risk)
Define Enterprise Risk Management (ERM). - CORRECT ANSWER
- >across functional view of risks affecting all areas of the entire
organization (embraces speculative risk)
Describe characteristics of Traditional Risk Management (TRM)
(5) - CORRECT ANSWER - >1. manages downside risks
2. oriented to cause-of-loss, tied to minimizing risk impact
3. functional siloed treatement of risk
4. risk ID and ownership with individual employee or
department
5. Reactive
,Describe characteristics of Enterprise Risk Management (ERM)
(5) - CORRECT ANSWER - >1) risk has potential upside and
downside
2) tied to strategic objectives
3) cross functional treatment of risk
4) uses subject matter experts and risk committees to identify
risk and spreads accountability of risk
5) proactive/opportunistic
List the ERM broad categories of risk and give examples of each
(4). - CORRECT ANSWER - >1.Operational Risk: related to
management activities (speculative)
2) Financial Risk: related to financial activities (speculative)
3) Hazard Risk: covered by insurance (pure)
4) Strategic Risk: related to an organization's strategic plan
(speculative)
Define Organizational Risk Culture (ORC). - CORRECT ANSWER -
>a set of understandings, knowledge, beliefs, values and habits
toward risk, that characterize a human group (organization) in
search of a common purpose
Explain the four characteristics of an effective ORC(4). -
CORRECT ANSWER - >1. Tone at the top - leadership clarity of
direction and a positive corporate attitude toward risk
, 2. Corporate Governance - clear responsibility for risk
management; transparency and timeliness of risk information
3. Decision Making - well informed decisions regarding risk;
performance evaluations encourage good risk management
decisions
4. Authority and Accountability - embedding risk management
abilities and responsibilities within the organization.
List the benefits of implementing an ERM program(7). -
CORRECT ANSWER - >1. Identifies threats and opportunities
related to an organization's strategic plan, objectives and total
cost of risk
2. Closely links an organization's business, operational, and
strategic objectives to the practice of managing risk
3. Uses performance metrics to drive improvement in decision
making
4. Provides a common language for communication about risks
and opportunities
5. Enhances management of activities and their associated risks
6. Safeguards the organization's branding and reputation
7. Allows organizations to capitalize on opportunities to
increase shareholder/stakeholder value
COMPLETE SOLUTIONS GUARANTEED PASS BRAND NEW 2025
Explain the impacts of an effective Risk Management program
on an organization (6) - CORRECT ANSWER - >1. protects
organization's reputation/brand
2. Increases profitability
3. Raises awareness of risk management
4. supports managerial objective
5. Improves morale and productivity
6. Improves quality, process and technology
Define Traditional Risk Management (TRM). - CORRECT
ANSWER - >a functional, siloed, view of risk affecting one or
more areas of the organization (focuses on pure risk)
Define Enterprise Risk Management (ERM). - CORRECT ANSWER
- >across functional view of risks affecting all areas of the entire
organization (embraces speculative risk)
Describe characteristics of Traditional Risk Management (TRM)
(5) - CORRECT ANSWER - >1. manages downside risks
2. oriented to cause-of-loss, tied to minimizing risk impact
3. functional siloed treatement of risk
4. risk ID and ownership with individual employee or
department
5. Reactive
,Describe characteristics of Enterprise Risk Management (ERM)
(5) - CORRECT ANSWER - >1) risk has potential upside and
downside
2) tied to strategic objectives
3) cross functional treatment of risk
4) uses subject matter experts and risk committees to identify
risk and spreads accountability of risk
5) proactive/opportunistic
List the ERM broad categories of risk and give examples of each
(4). - CORRECT ANSWER - >1.Operational Risk: related to
management activities (speculative)
2) Financial Risk: related to financial activities (speculative)
3) Hazard Risk: covered by insurance (pure)
4) Strategic Risk: related to an organization's strategic plan
(speculative)
Define Organizational Risk Culture (ORC). - CORRECT ANSWER -
>a set of understandings, knowledge, beliefs, values and habits
toward risk, that characterize a human group (organization) in
search of a common purpose
Explain the four characteristics of an effective ORC(4). -
CORRECT ANSWER - >1. Tone at the top - leadership clarity of
direction and a positive corporate attitude toward risk
, 2. Corporate Governance - clear responsibility for risk
management; transparency and timeliness of risk information
3. Decision Making - well informed decisions regarding risk;
performance evaluations encourage good risk management
decisions
4. Authority and Accountability - embedding risk management
abilities and responsibilities within the organization.
List the benefits of implementing an ERM program(7). -
CORRECT ANSWER - >1. Identifies threats and opportunities
related to an organization's strategic plan, objectives and total
cost of risk
2. Closely links an organization's business, operational, and
strategic objectives to the practice of managing risk
3. Uses performance metrics to drive improvement in decision
making
4. Provides a common language for communication about risks
and opportunities
5. Enhances management of activities and their associated risks
6. Safeguards the organization's branding and reputation
7. Allows organizations to capitalize on opportunities to
increase shareholder/stakeholder value
