ERM Final Exam Questions With Correct Solutions, Already Passed!!

There 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 - Answer-c) everyone understands that even the slightest impropriety on your travel and expense report may keep you from being promoted Enterprise 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 - Answer-d) focused on creating a holistic or portfolio view of all kinds of risks to the business The 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 - Answer-b) centers the focus of risk management around the context of strategy and performance Which 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 - Answer-a) higher percentages of organization have created management-level risk committees than the percentages of organizations that have appointed chief risk officers Biases 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." - Answer-b) "Because Mary always reviews the numbers in the budget-toactual 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." You 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 coursesc) 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 - Answer-a) growing demand of online offerings may make it difficult for the university to have enough students wanting to live in on-campus housing You 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 - Answer-d) describe a possible future negative outcome and then ask participants to describe likely explanations for that future possibility Best 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 - Answer-c) the official approval of the entity's risk appetite should reside with the board A PESTLE analysis is a technique designed to help management a) avoid biases in decision making b) identify events outside the entity that may impact its business model c) think about strengths and weaknesses to its business modeld) articulate its appetite for risk-taking - Answer-b) identify events outside the entity that may impact its business model ERM helps identify risks to the strategy of an organization. Often the organization's strategic plan contains a lot of "whats" and not much about the "hows". Which of the following statements is most representative of a "how" statement for a university? a) "We seek to be the #1 university in regards to undergraduate education" b) "Our goal is that only 25% of our budget will be based on state funding" c) "We are partnering with universities in each of the continents to expand the number of study-abroad opportunities we can provide our students" d) "We hope to grow out-of-state student enrollments from 18% to 25% of our student body" - Answerc) "We are partnering with universities in each of the continents to expand the number of study-abroad opportunities we can provide our students"