G-202 Examination Questions and
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
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1. Which of the following best describes the primary purpose of risk
management in an organization?
A. To eliminate all possible risks
B. To reduce risk to an acceptable level B
C. To increase profits at all costs
D. To create uncertainty in decision-making
Rationale: Risk management aims to identify, assess, and control risks
to reduce their impact to an acceptable level, not to eliminate them
entirely or create unnecessary uncertainty.
2. What is the first step in the risk management process?
A. Risk mitigation
B. Risk identification B
, C. Risk monitoring
D. Risk financing
Rationale: Risk identification is the first step because organizations
must first recognize potential risks before they can address or mitigate
them.
3. Which type of risk is generally beyond the control of an
organization?
A. Operational risk
B. Market risk B
C. Credit risk
D. Compliance risk
Rationale: Market risk, such as fluctuations in prices or interest rates,
is external and largely uncontrollable, unlike operational or
compliance risks.
4. In decision-making, which concept involves choosing an option
with the most favorable risk-return balance?
A. Risk aversion
B. Risk-return tradeoff B
C. Risk elimination
D. Risk acceptance
,Rationale: The risk-return tradeoff principle involves balancing
potential rewards against potential risks when making decisions.
5. Which document outlines the organization's approach to
managing risks?
A. Business plan
B. Risk management policy B
C. Financial statement
D. Marketing plan
Rationale: A risk management policy defines how the organization
identifies, evaluates, mitigates, and monitors risk.
6. What is the primary objective of internal controls?
A. To increase workload
B. To prevent and detect errors and fraud B
C. To reduce competition
D. To eliminate auditing
Rationale: Internal controls are designed to ensure accuracy,
reliability, and compliance while safeguarding assets.
7. Which of the following is an example of a qualitative risk
assessment method?
A. Monte Carlo simulation
B. Risk matrix B
, C. Sensitivity analysis
D. Statistical regression
Rationale: A risk matrix categorizes risks based on likelihood and
impact, making it a qualitative assessment tool.
8. Which financial statement shows an organization’s assets,
liabilities, and equity at a specific point in time?
A. Income statement
B. Balance sheet B
C. Cash flow statement
D. Statement of retained earnings
Rationale: The balance sheet provides a snapshot of an organization’s
financial position at a given date.
9. Which type of risk arises from ineffective processes or human
error within an organization?
A. Operational risk B
B. Strategic risk
C. Market risk
D. Legal risk
Rationale: Operational risk comes from internal processes, systems, or
people failing to operate correctly.
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. Which of the following best describes the primary purpose of risk
management in an organization?
A. To eliminate all possible risks
B. To reduce risk to an acceptable level B
C. To increase profits at all costs
D. To create uncertainty in decision-making
Rationale: Risk management aims to identify, assess, and control risks
to reduce their impact to an acceptable level, not to eliminate them
entirely or create unnecessary uncertainty.
2. What is the first step in the risk management process?
A. Risk mitigation
B. Risk identification B
, C. Risk monitoring
D. Risk financing
Rationale: Risk identification is the first step because organizations
must first recognize potential risks before they can address or mitigate
them.
3. Which type of risk is generally beyond the control of an
organization?
A. Operational risk
B. Market risk B
C. Credit risk
D. Compliance risk
Rationale: Market risk, such as fluctuations in prices or interest rates,
is external and largely uncontrollable, unlike operational or
compliance risks.
4. In decision-making, which concept involves choosing an option
with the most favorable risk-return balance?
A. Risk aversion
B. Risk-return tradeoff B
C. Risk elimination
D. Risk acceptance
,Rationale: The risk-return tradeoff principle involves balancing
potential rewards against potential risks when making decisions.
5. Which document outlines the organization's approach to
managing risks?
A. Business plan
B. Risk management policy B
C. Financial statement
D. Marketing plan
Rationale: A risk management policy defines how the organization
identifies, evaluates, mitigates, and monitors risk.
6. What is the primary objective of internal controls?
A. To increase workload
B. To prevent and detect errors and fraud B
C. To reduce competition
D. To eliminate auditing
Rationale: Internal controls are designed to ensure accuracy,
reliability, and compliance while safeguarding assets.
7. Which of the following is an example of a qualitative risk
assessment method?
A. Monte Carlo simulation
B. Risk matrix B
, C. Sensitivity analysis
D. Statistical regression
Rationale: A risk matrix categorizes risks based on likelihood and
impact, making it a qualitative assessment tool.
8. Which financial statement shows an organization’s assets,
liabilities, and equity at a specific point in time?
A. Income statement
B. Balance sheet B
C. Cash flow statement
D. Statement of retained earnings
Rationale: The balance sheet provides a snapshot of an organization’s
financial position at a given date.
9. Which type of risk arises from ineffective processes or human
error within an organization?
A. Operational risk B
B. Strategic risk
C. Market risk
D. Legal risk
Rationale: Operational risk comes from internal processes, systems, or
people failing to operate correctly.
