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CIA Part 1 Unit 4 Risk Management questions & answers.
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CIA Part 1 Unit 4 Risk Managementquestions & answers.
Risk ANS -Possibility of an event occurring that will have an impact on achievement of objectives. Impact
v. Likelihood
Risk Management ANS -A process to identify, assess, manage, and control potential events or situations
to provide reasonable assurance regarding achievement of objectives.
Risk Management Process (5) ANS -(1) Identification of context
(2) Risk Identification
(3) Risk Assessment & Prioritization
(4) Risk Response
(5) Risk Monitoring
Step 1 - Identification of Context ANS -Contexts can include laws, regs, capital projects, business
processes, technology, market risk, and organizations.
Step 2 - Risk Identification ANS -Should be performed at every level of the entity. Consider past events
and future possibilities. Event Inventories, questionnaires/surveys, leading event indicators/triggers,
facilitated workshops, interviews, process flow analysis, loss event data methodologies.
Brainstorming, SWOT, Scenario analysis
Step 3 - Risk Assessment and Prioritization ANS -Assess significance, likelihood, means of managing risk.
Qualitative - Risk ranking, heat maps, matrix
Quantitative - Probability models, how it would affect earnings
Step 4 - Risk Response ANS -How organization elects to manage individual risks.
, Controls ANS -Actions taken by management to manage risk and ensure risk responses are carried out.
Residual Risk ANS -Risk that remains after responses are executed
Step 5 - Risk Monitoring ANS -Track identified risks, evaluate current response plans, monitor residual
risks, identify new risks.
Who has oversight of risk management? ANS -The board
Who ensures risk management processes are functioning? ANS -Management
Who examines, evaluates, reports or recommends improvements for risk management? ANS -Internal
audit activity
Regarding Risk Management, CAE and IA's should (5) ANS -(1) Obtain a clear understanding of the org's
risk situation
(2) Consider RM frameworks and models
(3) Consider characteristics of the organization
(4) Review the maturity of the org's RM
(5) Have an established process for planning, auditing and reporting RM issues
Maturity levels for risk management (5) ANS -1 Initial
2 Repeatable
3 Defined
4 Managed
5 Optimized
Enterprise Risk Management ANS -Culture, capabilities, and practices, integrated with strategy-setting
and performance that organizations rely on to manage risk in creating, preserving, and realizing value.
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