1. In risk management, "probability" refers to:
A. The overall cost of managing a particular risk
B. The likelihood of a risk event occurring
C. The effectiveness of risk control measures
D. The financial loss associated with a risk
Answer: b) The likelihood of a risk event occurring
Rationale: Probability is the measure of how likely a particular
risk is to occur, helping determine the urgency and importance of
addressing it.
2. Which of the following risk management strategies is most
appropriate for high-probability, low-impact risks?
A. Risk avoidance
B. Risk transfer
C. Risk acceptance
D. Risk reduction
Answer: c) Risk acceptance
Rationale: For risks that are highly probable but have low
potential impact, it is often most cost-effective to accept the risk
rather than spend resources on mitigation strategies.
,3. Which of the following best describes "residual risk" in the
context of insurance?
A. The risk of losing an entire investment
B. The portion of risk remaining after all preventive measures are
implemented
C. The risk of not meeting regulatory requirements
D. The potential benefits of an investment strategy
Answer: b) The portion of risk remaining after all preventive
measures are implemented
Rationale: Residual risk is the risk that remains after all risk
control strategies (including insurance) have been implemented to
mitigate or manage the risk.
4. The process of transferring risk to a third party is typically
achieved through which method?
A. Using diversification
B. Purchasing insurance
C. Implementing safety measures
D. Avoiding the activity
Answer: b) Purchasing insurance
Rationale: Insurance is the most common method of transferring
risk, as it shifts the financial responsibility of a loss from the
company to the insurance provider.
, 5. Which of the following describes the "bow-tie" risk analysis
method?
A. A method that categorizes risks by severity
B. A visual representation that shows the relationship between a
risk event, its causes, and its consequences
C. A technique for calculating the financial cost of risk events
D. A process of identifying the likelihood of each risk occurring
Answer: b) A visual representation that shows the relationship
between a risk event, its causes, and its consequences
Rationale: The bow-tie method is a risk analysis tool that visually
connects risk causes, the risk event itself, and its potential
consequences, helping organizations manage risk scenarios more
effectively.
6. The concept of "residual risk" refers to:
A. The risk remaining after all mitigation measures are
implemented
B. The initial risk before any control measures are applied
C. The risks that can be completely avoided
D. The costs associated with insuring against risks
Answer: a) The risk remaining after all mitigation measures are
implemented
Rationale: Residual risk is the risk that remains after an
organization has implemented all possible mitigation measures.
A. The overall cost of managing a particular risk
B. The likelihood of a risk event occurring
C. The effectiveness of risk control measures
D. The financial loss associated with a risk
Answer: b) The likelihood of a risk event occurring
Rationale: Probability is the measure of how likely a particular
risk is to occur, helping determine the urgency and importance of
addressing it.
2. Which of the following risk management strategies is most
appropriate for high-probability, low-impact risks?
A. Risk avoidance
B. Risk transfer
C. Risk acceptance
D. Risk reduction
Answer: c) Risk acceptance
Rationale: For risks that are highly probable but have low
potential impact, it is often most cost-effective to accept the risk
rather than spend resources on mitigation strategies.
,3. Which of the following best describes "residual risk" in the
context of insurance?
A. The risk of losing an entire investment
B. The portion of risk remaining after all preventive measures are
implemented
C. The risk of not meeting regulatory requirements
D. The potential benefits of an investment strategy
Answer: b) The portion of risk remaining after all preventive
measures are implemented
Rationale: Residual risk is the risk that remains after all risk
control strategies (including insurance) have been implemented to
mitigate or manage the risk.
4. The process of transferring risk to a third party is typically
achieved through which method?
A. Using diversification
B. Purchasing insurance
C. Implementing safety measures
D. Avoiding the activity
Answer: b) Purchasing insurance
Rationale: Insurance is the most common method of transferring
risk, as it shifts the financial responsibility of a loss from the
company to the insurance provider.
, 5. Which of the following describes the "bow-tie" risk analysis
method?
A. A method that categorizes risks by severity
B. A visual representation that shows the relationship between a
risk event, its causes, and its consequences
C. A technique for calculating the financial cost of risk events
D. A process of identifying the likelihood of each risk occurring
Answer: b) A visual representation that shows the relationship
between a risk event, its causes, and its consequences
Rationale: The bow-tie method is a risk analysis tool that visually
connects risk causes, the risk event itself, and its potential
consequences, helping organizations manage risk scenarios more
effectively.
6. The concept of "residual risk" refers to:
A. The risk remaining after all mitigation measures are
implemented
B. The initial risk before any control measures are applied
C. The risks that can be completely avoided
D. The costs associated with insuring against risks
Answer: a) The risk remaining after all mitigation measures are
implemented
Rationale: Residual risk is the risk that remains after an
organization has implemented all possible mitigation measures.
