CAM Risk Assessment & Mitigation 2 — Questions and Answers
Question 1: A key account manager discovers that a top client generates 40% of total revenue. Which risk category does this situation primarily represent?
- Operational risk
- Concentration risk (Correct answer)
- Credit risk
- Compliance risk
Correct answer: Concentration risk
Concentration risk arises when a disproportionate share of revenue depends on a single client, partner, or segment.
Question 2: Which risk mitigation strategy involves transferring potential financial loss to a third party through contractual arrangements?
- Risk avoidance
- Risk acceptance
- Risk transfer (Correct answer)
- Risk reduction
Correct answer: Risk transfer
Risk transfer shifts the financial burden of a potential loss to another party, such as through insurance or indemnity clauses.
Question 3: A client's payment history shows increasingly delayed invoices over three months. What is the MOST appropriate first action for the account manager?
- Escalate immediately to legal
- Conduct a proactive credit risk review and open a dialogue with the client (Correct answer)
- Suspend services until payment is received
- Ignore the trend and wait for the client to reach out
Correct answer: Conduct a proactive credit risk review and open a dialogue with the client
A proactive credit risk review combined with open client dialogue allows early intervention before the situation escalates to default.
Question 4: In risk management, what does a 'risk register' primarily serve to document?
- Client satisfaction scores and NPS data
- Identified risks, their likelihood, impact, and assigned owners (Correct answer)
- Financial forecasts and revenue projections
- Employee performance metrics
Correct answer: Identified risks, their likelihood, impact, and assigned owners
A risk register is a centralized log that captures each identified risk along with its probability, potential impact, mitigation plan, and responsible owner.
Question 5: Which of the following BEST describes 'residual risk' in account management?
- Risk that has not yet been identified
- Risk that remains after mitigation controls have been applied (Correct answer)
- Risk transferred to the client via contract
- The highest-priority risk on the risk register
Correct answer: Risk that remains after mitigation controls have been applied
Residual risk is the level of risk that persists even after all planned mitigation measures have been implemented.
Question 6: A client operating in a heavily regulated industry undergoes a sudden regulatory change. Which risk type does this scenario illustrate?
- Strategic risk
- Reputational risk
- Regulatory/compliance risk (Correct answer)
- Liquidity risk
Correct answer: Regulatory/compliance risk
Regulatory or compliance risk arises when new laws, rules, or standards affect a client's operations and, by extension, the account relationship.
Question 7: When performing a risk impact assessment, what two dimensions are typically plotted on a risk matrix?
- Cost and timeline
- Likelihood and impact severity (Correct answer)
- Revenue and churn rate
- Client tenure and contract value
Correct answer: Likelihood and impact severity
A risk matrix plots the probability (likelihood) of a risk occurring against the severity of its impact to prioritize mitigation efforts.
CAM Risk Assessment & Mitigation 2
A key account manager discovers that a top client generates 40% of total revenue.
Which risk category does this situation primarily represent?