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CRM Principles of Risk Management Exam TEST FINAL EXAM
AND PRACTICE EXAM 20262027 BANK 2 VERSIONS
QUESTIONS WITH DETAILED VERIFIED ANSWERS EXAM
QUESTIONS WILL COME FROM HERE (100% CORRECT
ANSWERS A+ GRADED
Explain the impacts of an effective Risk Management program on an
organization (6) - ANSWER--1. protects organization's reputation/brand
2. Increases profitability
3. Raises awareness of risk management
4. supports managerial objective
5. Improves morale and productivity
6. Improves quality, process and technology
Define Traditional Risk Management (TRM). - ANSWER--a functional,
siloed, view of risk affecting one or more areas of the organization
(focuses on pure risk)
Define Enterprise Risk Management (ERM). - ANSWER--across
functional view of risks affecting all areas of the entire organization
(embraces speculative risk)
Describe characteristics of Traditional Risk Management (TRM) (5) -
ANSWER--1. manages downside risks
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2. oriented to cause-of-loss, tied to minimizing risk impact
3. functional siloed treatement of risk
4. risk ID and ownership with individual employee or department
5. Reactive
Describe characteristics of Enterprise Risk Management (ERM) (5) -
ANSWER--1) risk has potential upside and downside
2) tied to strategic objectives
3) cross functional treatment of risk
4) uses subject matter experts and risk committees to identify risk and
spreads accountability of risk
5) proactive/opportunistic
List the ERM broad categories of risk and give examples of each (4). -
ANSWER--1.Operational Risk: related to management activities
(speculative)
2) Financial Risk: related to financial activities (speculative)
3) Hazard Risk: covered by insurance (pure)
4) Strategic Risk: related to an organization's strategic plan (speculative)
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Define Organizational Risk Culture (ORC). - ANSWER--a set of
understandings, knowledge, beliefs, values and habits toward risk, that
characterize a human group (organization) in search of a common
purpose
Explain the four characteristics of an effective ORC(4). - ANSWER--1.
Tone at the top - leadership clarity of direction and a positive corporate
attitude toward risk
2. Corporate Governance - clear responsibility for risk management;
transparency and timeliness of risk information
3. Decision Making - well informed decisions regarding risk;
performance evaluations encourage good risk management decisions
4. Authority and Accountability - embedding risk management abilities
and responsibilities within the organization.
List the benefits of implementing an ERM program(7). - ANSWER--1.
Identifies threats and opportunities related to an organization's
strategic plan, objectives and total cost of risk
2. Closely links an organization's business, operational, and strategic
objectives to the practice of managing risk
3. Uses performance metrics to drive improvement in decision making
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4. Provides a common language for communication about risks and
opportunities
5. Enhances management of activities and their associated risks
6. Safeguards the organization's branding and reputation
7. Allows organizations to capitalize on opportunities to increase
shareholder/stakeholder value
Identify the requirements of ERM implementation (5). - ANSWER--1.
Support Of The Senior Management Team
2. An Implementation Leader And Dedicated Cross-Functional
Committees
3. An ERM Risk Assessment
4. A Common Language Regarding Risk
5. An Established Framework
CRM Principles of Risk Management Exam TEST FINAL EXAM
AND PRACTICE EXAM 20262027 BANK 2 VERSIONS
QUESTIONS WITH DETAILED VERIFIED ANSWERS EXAM
QUESTIONS WILL COME FROM HERE (100% CORRECT
ANSWERS A+ GRADED
Explain the impacts of an effective Risk Management program on an
organization (6) - ANSWER--1. protects organization's reputation/brand
2. Increases profitability
3. Raises awareness of risk management
4. supports managerial objective
5. Improves morale and productivity
6. Improves quality, process and technology
Define Traditional Risk Management (TRM). - ANSWER--a functional,
siloed, view of risk affecting one or more areas of the organization
(focuses on pure risk)
Define Enterprise Risk Management (ERM). - ANSWER--across
functional view of risks affecting all areas of the entire organization
(embraces speculative risk)
Describe characteristics of Traditional Risk Management (TRM) (5) -
ANSWER--1. manages downside risks
,2|Page
2. oriented to cause-of-loss, tied to minimizing risk impact
3. functional siloed treatement of risk
4. risk ID and ownership with individual employee or department
5. Reactive
Describe characteristics of Enterprise Risk Management (ERM) (5) -
ANSWER--1) risk has potential upside and downside
2) tied to strategic objectives
3) cross functional treatment of risk
4) uses subject matter experts and risk committees to identify risk and
spreads accountability of risk
5) proactive/opportunistic
List the ERM broad categories of risk and give examples of each (4). -
ANSWER--1.Operational Risk: related to management activities
(speculative)
2) Financial Risk: related to financial activities (speculative)
3) Hazard Risk: covered by insurance (pure)
4) Strategic Risk: related to an organization's strategic plan (speculative)
,3|Page
Define Organizational Risk Culture (ORC). - ANSWER--a set of
understandings, knowledge, beliefs, values and habits toward risk, that
characterize a human group (organization) in search of a common
purpose
Explain the four characteristics of an effective ORC(4). - ANSWER--1.
Tone at the top - leadership clarity of direction and a positive corporate
attitude toward risk
2. Corporate Governance - clear responsibility for risk management;
transparency and timeliness of risk information
3. Decision Making - well informed decisions regarding risk;
performance evaluations encourage good risk management decisions
4. Authority and Accountability - embedding risk management abilities
and responsibilities within the organization.
List the benefits of implementing an ERM program(7). - ANSWER--1.
Identifies threats and opportunities related to an organization's
strategic plan, objectives and total cost of risk
2. Closely links an organization's business, operational, and strategic
objectives to the practice of managing risk
3. Uses performance metrics to drive improvement in decision making
, 4|Page
4. Provides a common language for communication about risks and
opportunities
5. Enhances management of activities and their associated risks
6. Safeguards the organization's branding and reputation
7. Allows organizations to capitalize on opportunities to increase
shareholder/stakeholder value
Identify the requirements of ERM implementation (5). - ANSWER--1.
Support Of The Senior Management Team
2. An Implementation Leader And Dedicated Cross-Functional
Committees
3. An ERM Risk Assessment
4. A Common Language Regarding Risk
5. An Established Framework
