ERM Exam Final Questions & Answers 2024/2025
c) everyone understands that even the slightest impropriety on your travel and expense report may keep you from being promoted - ANSWERSThere are tangible and intangible aspects of an entity's culture that might provide insights about how that cultu...
c) everyone understands that even the slightest impropriety on your travel and expense report may keep
you from being promoted - ANSWERSThere are tangible and intangible aspects of an entity's culture that
might provide insights about how that culture might impact risk management. Which of the following
represent one of the intangible aspect?
a) all employees must complete a conflict of interest assessment each year
b) all new hires take a risk management online course before they start their new job
c) everyone understands that even the slightest impropriety on your travel and expense report may keep
you from being promoted
d) the board's character describes its role in risk oversight
d) focused on creating a holistic or portfolio view of all kinds of risks to the business -
ANSWERSEnterprise risk management is primarily
a) implemented to help management mitigate all kinds of risks on the horizon
b) designed by the board of directors and implemented by management
c) intended to provide a bottoms-up process for understanding important risks to the entity
d) focused on creating a holistic or portfolio view of all kinds of risks to the business
b) centers the focus of risk management around the context of strategy and performance - ANSWERSThe
recently released updated COSO ERM framework
a) emphasizes the importance of risk management for compliance benefits
b) centers the focus of risk management around the context of strategy and performance
c) must be used by all publicly traded companies
d) consists of 8 key components that contain 20 principles
,a) higher percentages of organization have created management-level risk committees than the
percentages of organizations that have appointed chief risk officers - ANSWERSWhich of the following
statements accurately describes recent trends related to enterprise risk management?
a) higher percentages of organization have created management-level risk committees than the
percentages of organizations that have appointed chief risk officers
b) if boards delegate risk oversight to a subcommittee, they most often delegate to the board's
compensation committee
c) the percentage of organizations pinpointing someone to serve as chief risk officer has been in decline
in recent years
d) boards in the US are placing more expectations on management to strengthen risk oversight than
boards in Europe and Asia/Australia
b) "Because Mary always reviews the numbers in the budget-to-actual reports to begin thinking about
risks, she sometimes fails to ask questions when there is little difference between budget-to-actual
results, when in fact there should be big differences." - ANSWERSBiases affect all of us as we make
decisions. Which of the following is an example of the "anchoring bias"?
a) "Because of John's extensive work in the airline industry, he has a hard time thinking about risks that
differ from his experiences and memory."
b) "Because Mary always reviews the numbers in the budget-to-actual reports to begin thinking about
risks, she sometimes fails to ask questions when there is little difference between budget-to-actual
results, when in fact there should be big differences."
c) "Jane is a high performer who places a lot of emphasis on being efficient. Sometimes she tends to
accept the first piece of evidence that supports her view about risks and then she moves onto a different
task."
d) "Because Pat is widely-viewed as the 'star' performer, most everyone agrees with the risks Pat
mentions in a risk workshop."
a) growing demand of online offerings may make it difficult for the university to have enough students
wanting to live in on-campus housing - ANSWERSYou are responsible for growing revenues from online
courses at the university where you work. Which of the following represents a good example of a "risk
of" that strategy?
, a) growing demand of online offerings may make it difficult for the university to have enough students
wanting to live in on-campus housing
b) there may not be a sufficient number of faculty who have skills to effectively teach online courses
c) the university's online course IT platforms are clunky for students and faculty to use, keeping them
from participating in online offerings
d) students are afraid to take online courses because they fear recruiters will not view them as rigorous
d) describe a possible future negative outcome and then ask participants to describe likely explanations
for that future possibility - ANSWERSYou are trying to develop a "pre-mortem" exercise to help
management think about risks. To set that up, you would
a) ask participants to think about how your biggest competitor would take advantage of our
vulnerabilities
b) instruct management to think about risks related to leadership succession planning to identify in
advance potential new candidates for key leadership positions
c) request participants to consider different levels of key assumptions related to the strategy to see how
the results would vary across each of the different levels of assumptions
d) describe a possible future negative outcome and then ask participants to describe likely explanations
for that future possibility
c) the official approval of the entity's risk appetite should reside with the board - ANSWERSBest practice
suggests that management think about the risk appetite of the organization. Which of the following best
represent a good "best practice"?
a) risk appetite is intended to reflect the amount of risks management wants to take
b) there should be one overarching risk appetite for the entity that encompasses all aspects of the entity
c) the official approval of the entity's risk appetite should reside with the board
d) in a regulated industry, such as banking, risk appetite is set by the regulator
b) identify events outside the entity that may impact its business model - ANSWERSA PESTLE analysis is a
technique designed to help management
a) avoid biases in decision making
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