Exam (elaborations)
Risk Management - Section D questions with correct answers 2024/2025
- Course
- Institution
Risk Management - Section D questions with correct answers 2024/2025
[Show more]
Content preview
Risk Management - Section DWhat is risk - ANSIn the Statement on Management Accounting: Enterprise Risk
Management: Frameworks, Elements and Integration, risk is defined as "Any event or action
that can keep an organization from achieving it's objectives"
What is enterprise risk management (ERM) - ANSThe Casualty Actuarial Society (CAS)
defines ERM as "the discipline by which an organization in any industry assesses, controls,
exploits, finances, and monitors risk from all sources for the purpose of increasing the
organization's short- and long-term value to its stakeholders."
What are some of the benefits of risk management - ANS- Increasing shareholder value
because of the process of minimizing losses and maximizing opportunities.
- Fewer disruptions to the operations of the business.
- Better utilization of the resources of the organization.
- Fewer shocks and unwelcome surprises.
-Providing more confidence to employees, stakeholders and governing and regulatory
bodies.
- More effective strategic planning.
- Better cost control.
- Enables quick assessment and grasp of new opportunities.
- Provides better and more complete contingency planning.
- Improves the ability of the organization to meet objectives and achieve opportunities.
- Enables quicker response to opportunities.
What are the four common categories of risk? - ANS1) Strategic risks include risks that are
on a more global, or macro, level for the business.
2) Operational risks are risks that result from inadequate or failed internal processes, people
or systems.
3) Financial risks are risks connected to the financial health of the company.
4) Hazard risk is the type of risk that is can be insured against.
, What is volatility - ANSVolatility is something that impacts risk. By definition, volatility has to
do with the consistency of results. If sales fluctuate greatly from day to day, there is great
volatility in sales. Volatility increases risk because it increases uncertainty about the future,
and there is a greater probability that the future results will be poor.
What are some examples of internal risks - ANS- Infrastructure events such as
organizational changes or policy changes. Changes can cause customer complaints and a
major decrease in customer satisfaction. Expansion of facilities carries a risk that the
increased production will not be accepted in the marketplace.
- Process-related events such as changes in the way something is done. Changes in
processes can cause a wide range of risk events, for example processing errors and
omissions.
-Internal technological events such as new software that may or may not work properly for a
variety of reasons, including improper setup and inadequate user training.
What are some examples of external risks - ANS- Competition
- Regulations
- Supply chain disruptions
- Political Risk
What are the basic steps in the risk management process - ANS- Risk identification
- Risk assessment
- Risk Prioritization
- Response planning
What are loss frequency and loss severity - ANSLoss Frequency (probability) is the measure
of how often the loss occurs, on average
Loss severity measures how serious a loss is in terms of cost when it occurs
What is a risk map - ANSx axis = 1-9 probability of an event happening
y axis = 1-9 estimated impact of the loss if it occurs
What are some of the quantitative risk assessment tools? - ANS- Value of Risk
- Cash Flow at Risk
- Earnings at Risk
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Qualityexam. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78112 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now
