CRMA Additional Exam Questions &
Answers (Grade A+)
Mainelli, Key Risk Indicators -
correct answer ✅There are four kinds of key risk indicators, each
of which prompts a different type of response.
1) The first is a challenge indicator, which reveals the root cause of
a risk event and should encourage an organization to take
appropriate action to prepare itself
for the impact.
2) The second is an action indicator, which provides feedback on
actions taken to show that they have been implemented correctly.
3) The third is a health indicator—the first indicator of impact—
showing whether the action has restored the organization to
normal health or whether further
action is required.
4) The fourth and final is a risk incident indicator, which
records the final impact.
When these indicators do not work properly, organizations receive
misleading messages, take inappropriate actions at unsuitable
times or no action at all, and treat the wrong risk in the wrong
way. Ultimately, the organization suffers greater impact from the
risk, or fails to reap the full benefit from an opportunity.
, CRMA Additional Exam Questions &
Answers (Grade A+)
Three Lines of Defense -
correct answer ✅A model of assurance whereby management
control is the first line of
defense in risk management, the various risk, control, and
compliance
oversight functions established by management serve as the
second line of
defense, and independent assurance is the third line of defense.
Natural Barriers (related to risk reporting) -
correct answer ✅1) CEO reluctance to share too much negative
information for fear of putting executive management in a bad
light.
2) A similar reluctance on the part of the internal auditors in case
they are challenged about the details.
3) The sheer volume of information that boards receive on risk and
all other matters that obscures what is critical. (For example, many
boards receive updates on 50 or more risks.)
4) A tendency toward infrequent reporting as a way for the CEO to
steer clear of difficult topics.
Answers (Grade A+)
Mainelli, Key Risk Indicators -
correct answer ✅There are four kinds of key risk indicators, each
of which prompts a different type of response.
1) The first is a challenge indicator, which reveals the root cause of
a risk event and should encourage an organization to take
appropriate action to prepare itself
for the impact.
2) The second is an action indicator, which provides feedback on
actions taken to show that they have been implemented correctly.
3) The third is a health indicator—the first indicator of impact—
showing whether the action has restored the organization to
normal health or whether further
action is required.
4) The fourth and final is a risk incident indicator, which
records the final impact.
When these indicators do not work properly, organizations receive
misleading messages, take inappropriate actions at unsuitable
times or no action at all, and treat the wrong risk in the wrong
way. Ultimately, the organization suffers greater impact from the
risk, or fails to reap the full benefit from an opportunity.
, CRMA Additional Exam Questions &
Answers (Grade A+)
Three Lines of Defense -
correct answer ✅A model of assurance whereby management
control is the first line of
defense in risk management, the various risk, control, and
compliance
oversight functions established by management serve as the
second line of
defense, and independent assurance is the third line of defense.
Natural Barriers (related to risk reporting) -
correct answer ✅1) CEO reluctance to share too much negative
information for fear of putting executive management in a bad
light.
2) A similar reluctance on the part of the internal auditors in case
they are challenged about the details.
3) The sheer volume of information that boards receive on risk and
all other matters that obscures what is critical. (For example, many
boards receive updates on 50 or more risks.)
4) A tendency toward infrequent reporting as a way for the CEO to
steer clear of difficult topics.
