Exam (elaborations) PRM - Professional Risk Manager

Professional Risk Manager (PRM)

Exam Revision Questions

Multiple Choice Questions (1 mark each)

1. Which of the following is a primary goal of risk management?

a) To eliminate all risks from an organization

b) To minimize the cost of managing risks

c) To identify, assess, and manage potential risks to an organization’s objectives

d) To transfer all risks to third parties

2. The ‘three lines of defense’ model in risk management includes:

a) Operational management, Internal audit, External audit

b) Risk managers, Compliance officers, Senior management

c) Business units, Risk management function, Internal audit

d) Board of directors, Risk managers, External consultants

3. Which of the following best defines market risk?

a) Risk arising from changes in interest rates, stock prices, or exchange rates

b) Risk of default by a borrower

c) Risk arising from operational failures

d) Risk related to a company’s reputation

4. Which of the following is NOT a typical method for managing financial risks in an organization?

a) Hedging

b) Diversification

c) Risk avoidance

d) Ignoring the risk

5. In the context of risk management, which of the following is the primary purpose of stress testing?

a) To determine the probability of an event occurring