Risk Management Exam With Correct Answers #14
Risk position - correct answer Organization's desired gain or acceptable loss in value
Residual risk - correct answer Amount of uncertainty that remains after all risk
management efforts have been exhausted.
Annualized loss expectancy (ALE) - correct answer Expected monetary loss for an
asset due to a risk over a one-year period; calculated by multiplying single loss
expectancy by annualized rate of occurrence.
Key risk indicators (kris) - correct answer Metrics that provide an early signal of
increasing risk exposures for an enterprise.
Hazard - correct answer Potential for harm, often associated with a condition or activity
that, if left uncontrolled, can result in injury or illness.
Risk control - correct answer Action taken to manage a risk.
Risk tolerance - correct answer Amount of uncertainty an organization is willing to
pursue or to accept to attain its risk management goals.
Risk - correct answer Uncertainty that has an effect on an objective, where outcomes
may include opportunities, losses, and threats.
Risk appetite - correct answer Amount of uncertainty an organization is willing to pursue
or to accept to attain its risk management goals.
Single loss expectancy (SLE) - correct answer Expected monetary loss every time a risk
occurs; calculated by multiplying asset value by exposure factor.
Whistleblowing - correct answer Reporting of an organization's violations of policies and
processes by employees.
Moral hazard - correct answer Situation in which one party engages in risky behavior
knowing that it is protected against the risk because another party will incur any
resulting loss.
Risk scorecard - correct answer Tool used to gather individual assessments of various
characteristics of risk (e.g., frequency of occurrence; degree of impact, loss, or gain for
the organization; degree of efficacy of current controls).
Principal-agent problem - correct answer Situation in which an agent (e.g., an
employee) makes decisions for a principal (e.g., an employer) potentially on the basis of
personal incentives that may not be aligned with the principal's incentives.
, Duty of care - correct answer Principle that organizations should take all steps that are
reasonably possible to ensure the health, safety, and well-being of employees and
protect them from foreseeable injury.
Risk management - correct answer System for identifying, evaluating, and controlling
actual and potential risks to an organization.
Contingency plan - correct answer Protocol that an organization implements when an
identified risk event occurs.
Conflict of interest - correct answer Situation in which a person or organization may
benefit from undue influence due to involvement in outside activities, relationships, or
investments that conflict with or have an impact on the employment relationship or its
outcomes.
What is the appropriate role for an HR manager in an investigatory interview for a
dischargeable offense? - correct answer Risk manager for the organization
Rationale: In this situation, the role of HR is to be proactive and manage the legal and
physical safety risks to the organization. HR managers must be aware of the need to
ensure due process to employees and to provide a safe work environment for all
employees. HR should not take a prosecutorial or defense role; the organization should
approach the situation and the evidence objectively and calmly.
Which situation that leads to workplace violence can be controlled by an organization? -
correct answer Pressure for increased productivity
Rationale: Conditions causing employee frustration and anger can lead to violence.
Examples include pressure for productivity, rigid management style, and layoffs.
Which best identifies the impact of cognitive barriers on risk management? - correct
answer Managers perceive risks in an outdated manner.
Rationale: Cognitive barriers to risk management relate to managers' tendencies to rely
on older perceptions of the risks they face and the most effective ways of managing
them.
What are the primary categories of barriers to effective risk management? - correct
answer Structural, cognitive, and cultural
Rationale: The primary categories of barriers to effective risk management are
structural, cognitive, and cultural. An organization's structure, willingness to change, and
values will impact its willingness to engage in risk management. Time, money, and
resources and location, personnel, and equipment may be impacted by risk
management efforts, but they don't drive those efforts. Similarly, opportunities, threats,
Risk position - correct answer Organization's desired gain or acceptable loss in value
Residual risk - correct answer Amount of uncertainty that remains after all risk
management efforts have been exhausted.
Annualized loss expectancy (ALE) - correct answer Expected monetary loss for an
asset due to a risk over a one-year period; calculated by multiplying single loss
expectancy by annualized rate of occurrence.
Key risk indicators (kris) - correct answer Metrics that provide an early signal of
increasing risk exposures for an enterprise.
Hazard - correct answer Potential for harm, often associated with a condition or activity
that, if left uncontrolled, can result in injury or illness.
Risk control - correct answer Action taken to manage a risk.
Risk tolerance - correct answer Amount of uncertainty an organization is willing to
pursue or to accept to attain its risk management goals.
Risk - correct answer Uncertainty that has an effect on an objective, where outcomes
may include opportunities, losses, and threats.
Risk appetite - correct answer Amount of uncertainty an organization is willing to pursue
or to accept to attain its risk management goals.
Single loss expectancy (SLE) - correct answer Expected monetary loss every time a risk
occurs; calculated by multiplying asset value by exposure factor.
Whistleblowing - correct answer Reporting of an organization's violations of policies and
processes by employees.
Moral hazard - correct answer Situation in which one party engages in risky behavior
knowing that it is protected against the risk because another party will incur any
resulting loss.
Risk scorecard - correct answer Tool used to gather individual assessments of various
characteristics of risk (e.g., frequency of occurrence; degree of impact, loss, or gain for
the organization; degree of efficacy of current controls).
Principal-agent problem - correct answer Situation in which an agent (e.g., an
employee) makes decisions for a principal (e.g., an employer) potentially on the basis of
personal incentives that may not be aligned with the principal's incentives.
, Duty of care - correct answer Principle that organizations should take all steps that are
reasonably possible to ensure the health, safety, and well-being of employees and
protect them from foreseeable injury.
Risk management - correct answer System for identifying, evaluating, and controlling
actual and potential risks to an organization.
Contingency plan - correct answer Protocol that an organization implements when an
identified risk event occurs.
Conflict of interest - correct answer Situation in which a person or organization may
benefit from undue influence due to involvement in outside activities, relationships, or
investments that conflict with or have an impact on the employment relationship or its
outcomes.
What is the appropriate role for an HR manager in an investigatory interview for a
dischargeable offense? - correct answer Risk manager for the organization
Rationale: In this situation, the role of HR is to be proactive and manage the legal and
physical safety risks to the organization. HR managers must be aware of the need to
ensure due process to employees and to provide a safe work environment for all
employees. HR should not take a prosecutorial or defense role; the organization should
approach the situation and the evidence objectively and calmly.
Which situation that leads to workplace violence can be controlled by an organization? -
correct answer Pressure for increased productivity
Rationale: Conditions causing employee frustration and anger can lead to violence.
Examples include pressure for productivity, rigid management style, and layoffs.
Which best identifies the impact of cognitive barriers on risk management? - correct
answer Managers perceive risks in an outdated manner.
Rationale: Cognitive barriers to risk management relate to managers' tendencies to rely
on older perceptions of the risks they face and the most effective ways of managing
them.
What are the primary categories of barriers to effective risk management? - correct
answer Structural, cognitive, and cultural
Rationale: The primary categories of barriers to effective risk management are
structural, cognitive, and cultural. An organization's structure, willingness to change, and
values will impact its willingness to engage in risk management. Time, money, and
resources and location, personnel, and equipment may be impacted by risk
management efforts, but they don't drive those efforts. Similarly, opportunities, threats,
