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RSK2601 TEST BANK 2024/2025
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RSK2601 TEST BANK 2024/2025 QUESTIONS WITH DETAILED ANSWERS
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, lOMoARcPSD|42036583RSk2601 Study bank
Enterprise risk management (ERM) is characterised by a
1. Narrow focus of hazard risks
2. Comprehensive, inclusive and proac琀椀ve approach to risk management
3. Func琀椀onal approach to risk management responsibili琀椀es
4. Lack of consistency in terms of level of detail and repor琀椀ng formats
The purpose of an ERM policy is to
1. Assist an organisa琀椀on integra琀椀ng risk management into its management processes
2. Communicate externally that risk management is being prac琀椀ced
3. Sa琀椀sfy internal and external audit requirements
4. Set out how the risks will be managed and controlled
A risk management policy sets out how the risk, which have been iden琀椀昀椀ed by the risk assessment
procedure, will be managed and controlled. The risk management policy assigns responsibility for
performing key tasks, establishes accountability with the appropriate managers, de昀椀nes boundaries
and limits and formalises repor琀椀ng structures. The policy should address speci昀椀c responsibili琀椀es of
the board, internal audit, external audit, the risk commi琀琀ee, the corporate governance commi琀琀ee,
the central risk func琀椀on, employees and third party contractors in implemen琀椀ng risk management. A
policy statement de昀椀nes a general commitment, direc琀椀on or inten琀椀on. A policy on risk management
expresses an organisa琀椀on’s commitment to risk management and clari昀椀es its general direc琀椀on or
inten琀椀on.
What do boards fundamentally seeks from an ERM system?
1. The avoidance of unpleasant surprises and losses
2. Integra琀椀on of risk management, audit and governance
3. Robust procedures
4. Competent risk management teams
Pg 9 textbook
Which of the following are bene昀椀ts of ERM?
a. Build con昀椀dence with stakeholders and the investment community
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, lOMoARcPSD|42036583
b. Align risk appe琀椀te and strategy
c. Link risk with audit requirements
d. Seize opportuni琀椀es
Choose the correct combina琀椀on:
1. A, c
2. B, c
3. A, b, d
4. All of the above
The bene昀椀ts of ERM include the following:
♦ Increase in the likelihood of a business realising its objec琀椀ves
♦ Build con昀椀dence in stakeholders and the investment community
♦ Comply with relevant legal and regulatory requirements
♦ Align risk appe琀椀te and strategy
♦ Improve organisa琀椀onal resilience
♦ Enhance corporate governance
♦ Embed the risk process through the organisa琀椀on
♦ Minimise opera琀椀onal surprises and losses
♦ Op琀椀mise alloca琀椀on of resources
♦ Iden琀椀fy and manage cross enterprise risks
♦ Link growth, risk and return
♦ Ra琀椀onalise capital
♦ Seize opportuni琀椀es
♦ Improve organisa琀椀onal learning
Which of the following is typical to the tradi琀椀onal approach to risk management?
1. Risk management carried out in silos and extensive use of insurance
2. A comprehensive approach to managing risks
3. Integra琀椀ng e昀昀orts of opera琀椀ons and risk managers
4. Viewing risk management as part of everyone’s daily rou琀椀ne
Tradi琀椀onally, risk management has been segmented and carried out in “silos”. However, with the
dynamic environment and the evolving nature of risk, businesses encounter new types of risk while
pursuing new business objec琀椀ves. There is therefore a need for an integrated framework for a
holis琀椀c approach to risk management.
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, lOMoARcPSD|42036583
King III applies to
a. Banks
b. Insurance ins琀椀tu琀椀ons
c. Public sector agencies
d. All listed companies on the JSE
Choose the correct combina琀椀on:
1. A, b
2. A, b, d
3. A, b, c
4. All of the above
King III applies to all listed companies on the JSE, banks, 昀椀nancial and insurance ins琀椀tu琀椀ons and
some public sector agencies.
The King III Report on Corporate Governance introduced which of the following new concepts?
a. Shareholder approval of remunera琀椀on policies
b. Alterna琀椀ve dispute resolu琀椀on (ADR)
c. Directors’ performance evalua琀椀on
d. Business rescue
Choose the correct combina琀椀on:
1. A, c
2. A, b, c
3. B, c, d
4. All of the above
The risk management policy forms part of the ERM
1. Scenario
2. Taxonomy
3. Framework
4. Structure
ERM is composed of seven elements namely: corporate governance, internal control,
implementa琀椀on, risk management framework, risk management policy, risk management process
and sources of risk.
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