CRM CRM Enterprise Risk Management 1 — Questions and Answers
Question 1: What is the primary goal of Enterprise Risk Management (ERM)?
- Eliminate all organizational risks
- Integrate risk management across all business functions (Correct answer)
- Focus solely on financial risks
- Transfer all risks to insurers
Correct answer: Integrate risk management across all business functions
ERM integrates risk management across all business units to provide a holistic view of organizational risk.
Question 2: Which framework is most commonly associated with ERM implementation?
- ISO 9001
- COSO ERM Framework (Correct answer)
- Six Sigma
- Lean Management
Correct answer: COSO ERM Framework
The COSO ERM Framework is the most widely recognized standard for implementing enterprise risk management.
Question 3: In ERM, what does 'risk appetite' refer to?
- The maximum loss an organization can absorb
- The amount of risk an organization is willing to accept in pursuit of its objectives (Correct answer)
- The total number of risks identified
- The cost of risk mitigation measures
Correct answer: The amount of risk an organization is willing to accept in pursuit of its objectives
Risk appetite defines how much risk an organization is willing to tolerate while pursuing its strategic objectives.
Question 4: What is a risk register in ERM?
- A list of insurance policies
- A document that records identified risks, their likelihood, impact, and mitigation strategies (Correct answer)
- A financial report on losses
- A compliance checklist
Correct answer: A document that records identified risks, their likelihood, impact, and mitigation strategies
A risk register is a central repository that documents all identified risks along with their assessment and treatment plans.
Question 5: Which of the following best describes 'risk tolerance' in ERM?
- The acceptable variation around risk appetite defining boundaries of risk-taking (Correct answer)
- The ability to withstand catastrophic losses
- The minimum risk required for operations
- The risk transfer mechanism
Correct answer: The acceptable variation around risk appetite defining boundaries of risk-taking
Risk tolerance is the acceptable variation around risk appetite, defining the boundaries of acceptable risk-taking.
Question 6: What is the role of the board of directors in ERM?
- Conducting daily risk assessments
- Setting risk appetite and overseeing the risk management framework (Correct answer)
- Processing insurance claims
- Performing operational audits
Correct answer: Setting risk appetite and overseeing the risk management framework
The board of directors sets the organization's risk appetite and provides oversight of the overall ERM framework.
CRM CRM Enterprise Risk Management 1
What is the primary goal of Enterprise Risk Management (ERM)?