RIMS - CRMP Complete Study Guide; 1 Analyze the Business Model, 2 Developing Organizational Risk Strategies, 3 RIMS CRMP-Implementing the Risk Process, 4 Developing Organizational Risk Management Competency, 5 Supporting Decision Making, Complete And Alre
Explain the impacts of an effective Risk Management program on an organization (6)
- 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). - ANSWER a functional, siloed, view of risk affecting one or more areas of the organization (focuses on pure risk)
Define Enterprise Risk Management (ERM). - ANSWER across functional view of risks affecting all areas of the entire organization (embraces speculative risk)
Describe characteristics of Traditional Risk Management (TRM) (5) - 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) - 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 ). - 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). - 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). - 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). - 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
Identify the requirements of ERM implementation (5). - ANSWER 1. Support Of The Senior Management Team 2. An Implementation Leader And Dedicated Cross-Functional Committees 3. An ERM Risk Assessment 4. A Common Language Regarding Risk 5. An Established Framework
Explain the purpose of ISO 31000 and identify its components. - ANSWER provide
an international recognized standard to managed risk in a detailed systematic way.
Identify the five interrelated components of COSO. - ANSWER 1) Governance and Culture 2) Strategy and Objective Setting 3) Performance 4) Review and Revision 5) Information Communication and Reporting
Identify the obstacles to ERM implementation (6). - ANSWER 1) Lack of support from Senior Management 2) Difficult to invest capital in the Risk Management Process 3) Showing return on investment (value) 4) Different skills are required to successfully implement ERM vs. TRM 5) Risk is viewed negatively in many organizations, so expanding to include upside risks may be difficult 6) Perception of Risk vs. Reality. Taking risk is often seen as a matter of courage rather than a reasoned, quality decision.
Define risk appetite - ANSWER willingness to accept or tolerate risk
Define risk ability. - ANSWER financial capacity to assuming risk
Identify the general classes of risk (7). - ANSWER 1) Economic 2) Legal 3) Political 4) Social 5) Physical 6) Juridical 7) Technological
Describe the governing documents of a Risk Management program. - ANSWER 1) Manual 2) Policy Statement 3) Mission Statement
Describe how to implement an effective Risk Management program. - ANSWER 1)
Communicate throughout Organization and with risk team. 2) Involve all levels and reinforce commitment to risk management principles
Explain why risk identification is the most important step in the risk management process. - ANSWER to effectively manage and control exposures, perils, and hazards they must first be identified.
Identify the four logical classifications and give examples of the loss exposures related to each. - ANSWER 1) Property 2) Liability 3) Human Resources 4) Net income
Define and list the four elements of Negligence (unintentional tort) - ANSWER 1) duty owed 2) breach of that duty 3) causation 4) damage
List the four requirements of an enforceable contract and describe their remedies. - ANSWER 1) Competent parties 2) Agreement or assent 3) legal consideration (exchange of values) 4) Legal purposes
Identify the purpose of checklists and surveys. - ANSWER To systematically identify as many exposures, perils and hazards as possible.
Identify the characteristics of checklists and surveys (6). - ANSWER 1) Standardized 2) minimal training for use 3) cannot cover all operations 4) may not identify new exposures 5) will no reflect severity 6) does not prioritize severity
Identify the purpose of flowcharts. - ANSWER to graphically and sequentially depict the activities of a particular operations or process to identify exposures, perils,
and hazards.
Explain the impacts of an effective Risk Management program on an organization (6)
- 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). - ANSWER a functional, siloed, view of risk affecting one or more areas of the organization (focuses on pure risk)
Define Enterprise Risk Management (ERM). - ANSWER across functional view of risks affecting all areas of the entire organization (embraces speculative risk)
Describe characteristics of Traditional Risk Management (TRM) (5) - 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) - 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 ). - 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). - 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). - 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). - 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
Identify the requirements of ERM implementation (5). - ANSWER 1. Support Of The Senior Management Team 2. An Implementation Leader And Dedicated Cross-Functional Committees 3. An ERM Risk Assessment 4. A Common Language Regarding Risk 5. An Established Framework
Explain the purpose of ISO 31000 and identify its components. - ANSWER provide
an international recognized standard to managed risk in a detailed systematic way.
Identify the five interrelated components of COSO. - ANSWER 1) Governance and Culture 2) Strategy and Objective Setting 3) Performance 4) Review and Revision 5) Information Communication and Reporting
Identify the obstacles to ERM implementation (6). - ANSWER 1) Lack of support from Senior Management 2) Difficult to invest capital in the Risk Management Process 3) Showing return on investment (value) 4) Different skills are required to successfully implement ERM vs. TRM 5) Risk is viewed negatively in many organizations, so expanding to include upside risks may be difficult 6) Perception of Risk vs. Reality. Taking risk is often seen as a matter of courage rather than a reasoned, quality decision.
Define risk appetite - ANSWER willingness to accept or tolerate risk
Define risk ability. - ANSWER financial capacity to assuming risk
Identify the general classes of risk (7). - ANSWER 1) Economic 2) Legal 3) Political 4) Social 5) Physical 6) Juridical 7) Technological
Describe the governing documents of a Risk Management program. - ANSWER 1) Manual 2) Policy Statement 3) Mission Statement
Describe how to implement an effective Risk Management program. - ANSWER 1)
Communicate throughout Organization and with risk team. 2) Involve all levels and reinforce commitment to risk management principles
Explain why risk identification is the most important step in the risk management process. - ANSWER to effectively manage and control exposures, perils, and hazards they must first be identified.
Identify the four logical classifications and give examples of the loss exposures related to each. - ANSWER 1) Property 2) Liability 3) Human Resources 4) Net income
Define and list the four elements of Negligence (unintentional tort) - ANSWER 1) duty owed 2) breach of that duty 3) causation 4) damage
List the four requirements of an enforceable contract and describe their remedies. - ANSWER 1) Competent parties 2) Agreement or assent 3) legal consideration (exchange of values) 4) Legal purposes
Identify the purpose of checklists and surveys. - ANSWER To systematically identify as many exposures, perils and hazards as possible.
Identify the characteristics of checklists and surveys (6). - ANSWER 1) Standardized 2) minimal training for use 3) cannot cover all operations 4) may not identify new exposures 5) will no reflect severity 6) does not prioritize severity
Identify the purpose of flowcharts. - ANSWER to graphically and sequentially depict the activities of a particular operations or process to identify exposures, perils,
and hazards.
