RISK MANAGEMENT EXAMINATION QUESTIONS AND
CORRECT ANSWER&EXPLANATION |GRADED A+ STUDY
GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY
1. Risk management is the process of:
A. Eliminating all business activities
B. Identifying, assessing, and controlling risks
C. Increasing uncertainty
D. Avoiding financial reporting
Answer: B
Rationale: Risk management focuses on identifying and controlling potential threats.
2. The main goal of risk management is to:
A. Maximize losses
B. Minimize risk impact on objectives
C. Avoid all profits
D. Eliminate accounting systems
Answer: B
Rationale: It reduces negative impacts while supporting objectives.
3. Risk refers to:
A. Guaranteed outcome
B. Uncertainty of future events
C. Fixed profit
D. Completed transaction
Answer: B
Rationale: Risk involves uncertainty of outcomes.
4. The first step in risk management is:
,A. Risk treatment
B. Risk identification
C. Risk transfer
D. Risk avoidance
Answer: B
Rationale: Risks must be identified before managing them.
5. Risk assessment involves:
A. Ignoring hazards
B. Evaluating likelihood and impact
C. Eliminating budgets
D. Increasing uncertainty
Answer: B
Rationale: Assessment measures probability and severity.
6. Risk probability refers to:
A. Impact size only
B. Likelihood of occurrence
C. Financial gain
D. Asset value
Answer: B
Rationale: Probability measures chance of risk occurring.
7. Risk impact refers to:
A. Size of consequences if risk occurs
B. Probability only
C. Revenue growth
D. Cash flow
Answer: A
Rationale: Impact measures severity of loss.
8. Risk mitigation means:
, A. Increasing risk
B. Reducing risk exposure
C. Ignoring risk
D. Transferring profits
Answer: B
Rationale: Mitigation reduces likelihood or impact.
9. Risk avoidance means:
A. Eliminating risk by not engaging in activity
B. Accepting all risks
C. Transferring risk
D. Increasing exposure
Answer: A
Rationale: Avoidance removes the risky activity.
10. Risk transfer involves:
A. Passing risk to another party
B. Ignoring risk
C. Increasing liability
D. Eliminating controls
Answer: A
Rationale: Insurance is a common example.
11. Risk retention means:
A. Accepting and bearing the risk
B. Eliminating risk
C. Transferring risk
D. Avoiding all activity
Answer: A
Rationale: Organization accepts consequences.
12. Insurance is an example of:
CORRECT ANSWER&EXPLANATION |GRADED A+ STUDY
GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY
1. Risk management is the process of:
A. Eliminating all business activities
B. Identifying, assessing, and controlling risks
C. Increasing uncertainty
D. Avoiding financial reporting
Answer: B
Rationale: Risk management focuses on identifying and controlling potential threats.
2. The main goal of risk management is to:
A. Maximize losses
B. Minimize risk impact on objectives
C. Avoid all profits
D. Eliminate accounting systems
Answer: B
Rationale: It reduces negative impacts while supporting objectives.
3. Risk refers to:
A. Guaranteed outcome
B. Uncertainty of future events
C. Fixed profit
D. Completed transaction
Answer: B
Rationale: Risk involves uncertainty of outcomes.
4. The first step in risk management is:
,A. Risk treatment
B. Risk identification
C. Risk transfer
D. Risk avoidance
Answer: B
Rationale: Risks must be identified before managing them.
5. Risk assessment involves:
A. Ignoring hazards
B. Evaluating likelihood and impact
C. Eliminating budgets
D. Increasing uncertainty
Answer: B
Rationale: Assessment measures probability and severity.
6. Risk probability refers to:
A. Impact size only
B. Likelihood of occurrence
C. Financial gain
D. Asset value
Answer: B
Rationale: Probability measures chance of risk occurring.
7. Risk impact refers to:
A. Size of consequences if risk occurs
B. Probability only
C. Revenue growth
D. Cash flow
Answer: A
Rationale: Impact measures severity of loss.
8. Risk mitigation means:
, A. Increasing risk
B. Reducing risk exposure
C. Ignoring risk
D. Transferring profits
Answer: B
Rationale: Mitigation reduces likelihood or impact.
9. Risk avoidance means:
A. Eliminating risk by not engaging in activity
B. Accepting all risks
C. Transferring risk
D. Increasing exposure
Answer: A
Rationale: Avoidance removes the risky activity.
10. Risk transfer involves:
A. Passing risk to another party
B. Ignoring risk
C. Increasing liability
D. Eliminating controls
Answer: A
Rationale: Insurance is a common example.
11. Risk retention means:
A. Accepting and bearing the risk
B. Eliminating risk
C. Transferring risk
D. Avoiding all activity
Answer: A
Rationale: Organization accepts consequences.
12. Insurance is an example of:
