Risk Assessment & Management Flashcards
7 cards from real Certified Internal Auditor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Assessment & Management flashcards as text
Which framework is most commonly referenced for enterprise risk management (ERM) in the United States?
Answer: COSO ERM Framework
The COSO Enterprise Risk Management—Integrating with Strategy and Performance framework is the predominant ERM standard in the U.S.
An internal auditor assessing strategic risk should focus primarily on risks that could affect:
Answer: Achievement of long-term organizational objectives
Strategic risks threaten an organization's ability to achieve its high-level goals and long-term direction.
Velocity of risk refers to:
Answer: How quickly a risk can impact the organization once triggered
Risk velocity measures how rapidly an event can manifest and cause harm, which affects the time available for detection and response.
When auditing an ERM program, the internal auditor's role is best described as:
Answer: Providing objective assurance and consulting on the ERM process
Internal auditors provide independent assurance that the ERM process is effective and may offer consulting services, but must avoid owning or managing risk on behalf of management.
A risk that arises from the potential for legal or regulatory sanctions due to non-compliance is classified as:
Answer: Compliance risk
Compliance risk is the exposure to fines, penalties, or legal action stemming from failure to adhere to laws, regulations, or internal policies.
Which of the following best illustrates 'correlation risk' in a risk portfolio?
Answer: Two unrelated risks that both increase during economic downturns
Correlation risk occurs when multiple risks move together under certain conditions, amplifying overall exposure beyond what individual risk assessments suggest.
Which quantitative technique estimates potential losses by simulating thousands of possible outcomes using random variables?
Answer: Monte Carlo simulation
Monte Carlo simulation runs many iterations with randomly sampled inputs to produce a probability distribution of potential outcomes.