RISK MANAGEMENT
1) Risk management objectives
a. Should align with organizations overall objectives
b. Do not need to balance risk and reward
c. May not meet regulatory compliance
d. May not enhance value creation
2) During the past year, international toys has undertaken four capital projects: The company has
renovated and refurbished one of its aging warehouse buildings. It has purchased the most recent
version of its current ordering processing computer software. It has added two trucks to its fleet of
delivery vehicles. Lastly, it has purchased a new production machine that will allow it to launch a
new product line. Which one of the following company projects is the most speculative risk?
a. Warehouse refurbishment
b. Software upgrade
c. Two new trucks
d. New production machine
3) Which risk management measure applies to the maximum potential damaged with an occurrence?
a. Likelihood
b. Exposure
c. Volatility
d. Correlation
4) Which one of the following is a pure risk?
a. Opening a new business
b. Purchasing 100 shares of common stock
c. A lawsuit for property damage
d. Betting $50 on a Jays game
5) Which one of the following is a speculative risk?
a. The risk of premature death
b. The risk of Wager at a casino
c. The risk of Being sued for bodily injury
d. The risk of Insufficient retirement income
6) The traditional risk management process with enterprise wide risk management process differ
significantly with
a. The frequency at which risks are evaluated
b. The type of risks addressed
c. The analysis of loss exposures
d. The monitoring process employed
7) The category of risk that is identified as the possibility of loss or no loss but no chance of gain is:
a. Hazard risk
b. Operational risk
c. Financial risk
d. Strategic risk
8) Which of the following is NOT included in an organizations total cost of risk:
a. Cost of accidental losses not reimbursed by insurance or other outside sources.
b. Insurance premiums or expenses incurred by noninsurance indemnity
c. Cost of corporation’s total administration activities
, d. Cost of risk control techniques to prevent or reduce the size of accidental losses
9) Classifying risk appropriately can help in managing risk. Which one of the following statements is
correct with respect to classifications of risk.
a. Risk classifications are mutually exclusive and only one can be applied to any given risk
b. A pure risk is a chance of loss or no loss, but no change of gain
c. Insurance deals primarily with speculative risk, rather than with pure risk
d. Usually, pure risks and speculative risks can be managed using the same techniques.
10) A risk management pgoram goal that may enhance an organizations reputation is:
a. Economy of operations
b. Tolerable uncertainty
c. Survival
d. Social responsibility
11) Some organizations, because of the services or product they provide, cannot incur any interruption
of services. Some examples include hospitals, telephone companies, and internet service providers.
From a risk management perspective, which post-loss goal is most essential for these organizations.
a. Earning stability
b. Profitability
c. Social responsibility
d. Continuity of operations
12) Which one of the following is a common risk management benefit the entire economy would realize
as a consequence of a risk management program?
a. Reducing technological obsolescence
b. Reducing political turmoil
c. Reducing waste of resources
d. Reducing segregation
13) Which statement below is true regarding the International Organization for Standardization’s ISO
31000 standard?
a. ISO 31000 is applied to all operations and activities of organizations in the financial sector.
b. ISO 31000 contains principles, processes, and regulations to manage risk.
c. IS0 31000 applies primarily to financial and strategic risks.
d. ISO 3100 applies regardless of whether the risk has positive and/or negative consequences.
14) Which one of the following is true regarding COSO?
a. COSO 2004 is based on root cause analysis
b. COSO defines risk as the effect of uncertainty of objectives
c. COSO was issued by the government
d. COSO originated with a focus on financial risk
15) A structure that supports an organization’s risk management process including elements such as
concepts, methods, procedures and metrics is the:
a. Risk management framework
b. Risk management standard
c. Risk management manual
d. Risk management policy statement
16) The part of ISO 3100 process that include risk identification, risk analysis and risk evaluation is
known as:
1) Risk management objectives
a. Should align with organizations overall objectives
b. Do not need to balance risk and reward
c. May not meet regulatory compliance
d. May not enhance value creation
2) During the past year, international toys has undertaken four capital projects: The company has
renovated and refurbished one of its aging warehouse buildings. It has purchased the most recent
version of its current ordering processing computer software. It has added two trucks to its fleet of
delivery vehicles. Lastly, it has purchased a new production machine that will allow it to launch a
new product line. Which one of the following company projects is the most speculative risk?
a. Warehouse refurbishment
b. Software upgrade
c. Two new trucks
d. New production machine
3) Which risk management measure applies to the maximum potential damaged with an occurrence?
a. Likelihood
b. Exposure
c. Volatility
d. Correlation
4) Which one of the following is a pure risk?
a. Opening a new business
b. Purchasing 100 shares of common stock
c. A lawsuit for property damage
d. Betting $50 on a Jays game
5) Which one of the following is a speculative risk?
a. The risk of premature death
b. The risk of Wager at a casino
c. The risk of Being sued for bodily injury
d. The risk of Insufficient retirement income
6) The traditional risk management process with enterprise wide risk management process differ
significantly with
a. The frequency at which risks are evaluated
b. The type of risks addressed
c. The analysis of loss exposures
d. The monitoring process employed
7) The category of risk that is identified as the possibility of loss or no loss but no chance of gain is:
a. Hazard risk
b. Operational risk
c. Financial risk
d. Strategic risk
8) Which of the following is NOT included in an organizations total cost of risk:
a. Cost of accidental losses not reimbursed by insurance or other outside sources.
b. Insurance premiums or expenses incurred by noninsurance indemnity
c. Cost of corporation’s total administration activities
, d. Cost of risk control techniques to prevent or reduce the size of accidental losses
9) Classifying risk appropriately can help in managing risk. Which one of the following statements is
correct with respect to classifications of risk.
a. Risk classifications are mutually exclusive and only one can be applied to any given risk
b. A pure risk is a chance of loss or no loss, but no change of gain
c. Insurance deals primarily with speculative risk, rather than with pure risk
d. Usually, pure risks and speculative risks can be managed using the same techniques.
10) A risk management pgoram goal that may enhance an organizations reputation is:
a. Economy of operations
b. Tolerable uncertainty
c. Survival
d. Social responsibility
11) Some organizations, because of the services or product they provide, cannot incur any interruption
of services. Some examples include hospitals, telephone companies, and internet service providers.
From a risk management perspective, which post-loss goal is most essential for these organizations.
a. Earning stability
b. Profitability
c. Social responsibility
d. Continuity of operations
12) Which one of the following is a common risk management benefit the entire economy would realize
as a consequence of a risk management program?
a. Reducing technological obsolescence
b. Reducing political turmoil
c. Reducing waste of resources
d. Reducing segregation
13) Which statement below is true regarding the International Organization for Standardization’s ISO
31000 standard?
a. ISO 31000 is applied to all operations and activities of organizations in the financial sector.
b. ISO 31000 contains principles, processes, and regulations to manage risk.
c. IS0 31000 applies primarily to financial and strategic risks.
d. ISO 3100 applies regardless of whether the risk has positive and/or negative consequences.
14) Which one of the following is true regarding COSO?
a. COSO 2004 is based on root cause analysis
b. COSO defines risk as the effect of uncertainty of objectives
c. COSO was issued by the government
d. COSO originated with a focus on financial risk
15) A structure that supports an organization’s risk management process including elements such as
concepts, methods, procedures and metrics is the:
a. Risk management framework
b. Risk management standard
c. Risk management manual
d. Risk management policy statement
16) The part of ISO 3100 process that include risk identification, risk analysis and risk evaluation is
known as:
