ERM MBA 518 Exam Final Questions & Answers 2024/2025
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Course
ERM MBA 518
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ERM MBA 518
ERM MBA 518 Exam Final Questions & Answers 2024/2025
Limitations of traditional risk management - ANSWERS1. Risks managed in silos, and
2. Risks that fall between silos are unnoticed.
3. Rarely connect risk to strategy
4. Excess focus on internal risks, only.
5*. Inefficiencies in resp...
ERM MBA 518 Exam Final Questions &
Answers 2024/2025
Limitations of traditional risk management - ANSWERS1. Risks managed in silos, and
2. Risks that fall between silos are unnoticed.
3. Rarely connect risk to strategy
4. Excess focus on internal risks, only.
5*. Inefficiencies in responses; don't see duplication of responses.
Key elements (6) of ERM - ANSWERS1. Ongoing process
2. Board and senior mgmt must lead from the top
3. Enterprise-wide integration; holistic
4. Linked to strategy development and achievement
5. Managing risks, not only mitigating them
6. Consideration of risk appetite
On which types of risks does ERM focus? - ANSWERSAll types of risks, especially those that impact
achievement of strategic objectives.
Primary BOD responsibilities (2) in ERM? - ANSWERS1. Understand, approve of mgmt's process for
managing risks (philosophy and practices).
2. Understand, approve types of risks identified by
mgmt's process (in relation to risk appetite).
What is the role of senior management in ERM? - ANSWERSLead process
Set tone
Enterprise-wide perspective
, What is the role of business unit leaders in ERM? - ANSWERSFocused on core operations, with the
understanding that they directly own risks.
NYSE listing requirements in relation to ERM - ANSWERS1. Audit committee must discuss with mgmt its
risk assessment and risk management process
2. Audit committee can delegate this to another committee, but they still must make sure that has been
done by the other committee.
NYSE risk management regulations for publicly traded companies - ANSWERS1. Must disclose in the
proxy compensation-related risks if those plans create a reasonable possibility that there may be a
material adverse event.
2. Must disclose in the proxy the board's role in risk oversight.
Impact of credit rating agencies on ERM - ANSWERSS&P evaluates "management and governance" as
part of the credit rating process, using a 15-factor assessment, 2 of which explicitly relate to ERM.
Companies are scored at four levels: weak, fair, satisfactory, and strong.
Effective risk management affects credit rating by allowing debt payment.
Risk oversight requirements of Dodd-Frank - ANSWERSOnly for large banks of > $10B in assets. Those
entities must have a risk committee at the board level.
This risk committee is held responsible for risk oversight, required to include appropriate number of
independent directors and at least one "risk management expert".
What is ORSA, and what types of organizations does it affect? - ANSWERSOwn Risk and Solvency
Assessment; affects insurance companies
What are "crown jewels"? - ANSWERSCore business drivers; things that already successfully drive value
What is the purpose of new strategic initiatives? - ANSWERSNew strategic initiatives are intended to
drive new value
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