CERTIFIED ENTERPRISE RISK MANAGER
(CERM) QUESTION AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A INSTANT
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1. Enterprise Risk Management (ERM) is best defined as:
A. Managing financial risks only
B. Managing risks within individual departments
C. A coordinated approach to identifying, assessing, and managing all risks
affecting an organization
D. Eliminating all organizational risks
Answer: C
Rationale: ERM integrates risk management across the entire enterprise to
address strategic, operational, financial, and compliance risks.
2. The primary objective of ERM is to:
A. Avoid all risks
B. Reduce insurance costs
C. Support the achievement of organizational objectives
D. Increase regulatory reporting
Answer: C
Rationale: ERM aligns risk management with strategy and performance to help
achieve objectives.
, 3. Which framework is most commonly associated with ERM?
A. ITIL
B. PMBOK
C. COSO ERM Framework
D. Six Sigma
Answer: C
Rationale: COSO ERM provides a widely accepted structure for enterprise-wide
risk management.
4. Risk appetite refers to:
A. The minimum risk an organization must take
B. Risks imposed by regulators
C. The amount of risk an organization is willing to accept in pursuit of
value
D. Total risk exposure
Answer: C
Rationale: Risk appetite defines acceptable risk levels aligned with strategy.
5. Risk tolerance is best described as:
A. Overall risk philosophy
B. Acceptable variation around objectives
C. Regulatory risk limit
D. Maximum insurance coverage
Answer: B
Rationale: Risk tolerance sets boundaries for acceptable deviations from
objectives.
6. Which type of risk arises from inadequate internal processes?
A. Strategic risk
, B. Financial risk
C. Operational risk
D. Reputational risk
Answer: C
Rationale: Operational risk stems from people, processes, systems, or external
events.
7. Strategic risk primarily relates to:
A. Accounting errors
B. Fraud losses
C. Failure to achieve long-term objectives
D. Regulatory fines
Answer: C
Rationale: Strategic risk affects the organization’s direction and competitive
position.
8. Compliance risk is associated with:
A. Market volatility
B. System failures
C. Violation of laws, regulations, or standards
D. Poor leadership
Answer: C
Rationale: Compliance risk arises from failing to meet legal or regulatory
requirements.
9. Which risk response involves discontinuing an activity?
A. Mitigation
B. Acceptance
(CERM) QUESTION AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2026 Q&A INSTANT
DOWNLOAD PDF
1. Enterprise Risk Management (ERM) is best defined as:
A. Managing financial risks only
B. Managing risks within individual departments
C. A coordinated approach to identifying, assessing, and managing all risks
affecting an organization
D. Eliminating all organizational risks
Answer: C
Rationale: ERM integrates risk management across the entire enterprise to
address strategic, operational, financial, and compliance risks.
2. The primary objective of ERM is to:
A. Avoid all risks
B. Reduce insurance costs
C. Support the achievement of organizational objectives
D. Increase regulatory reporting
Answer: C
Rationale: ERM aligns risk management with strategy and performance to help
achieve objectives.
, 3. Which framework is most commonly associated with ERM?
A. ITIL
B. PMBOK
C. COSO ERM Framework
D. Six Sigma
Answer: C
Rationale: COSO ERM provides a widely accepted structure for enterprise-wide
risk management.
4. Risk appetite refers to:
A. The minimum risk an organization must take
B. Risks imposed by regulators
C. The amount of risk an organization is willing to accept in pursuit of
value
D. Total risk exposure
Answer: C
Rationale: Risk appetite defines acceptable risk levels aligned with strategy.
5. Risk tolerance is best described as:
A. Overall risk philosophy
B. Acceptable variation around objectives
C. Regulatory risk limit
D. Maximum insurance coverage
Answer: B
Rationale: Risk tolerance sets boundaries for acceptable deviations from
objectives.
6. Which type of risk arises from inadequate internal processes?
A. Strategic risk
, B. Financial risk
C. Operational risk
D. Reputational risk
Answer: C
Rationale: Operational risk stems from people, processes, systems, or external
events.
7. Strategic risk primarily relates to:
A. Accounting errors
B. Fraud losses
C. Failure to achieve long-term objectives
D. Regulatory fines
Answer: C
Rationale: Strategic risk affects the organization’s direction and competitive
position.
8. Compliance risk is associated with:
A. Market volatility
B. System failures
C. Violation of laws, regulations, or standards
D. Poor leadership
Answer: C
Rationale: Compliance risk arises from failing to meet legal or regulatory
requirements.
9. Which risk response involves discontinuing an activity?
A. Mitigation
B. Acceptance
