Practice Test Geeks(CRA) Certified Risk Analyst Practice Test
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ERM & COSO Framework Flashcards

7 cards from real CRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 ERM & COSO Framework flashcards as text

  1. Under the COSO ERM framework, which of the following is an example of a 'risk-taking' culture element that the board should monitor?

    Answer: Incentive compensation structures that reward excessive short-term risk-taking

    Incentive structures that reward short-term risk-taking can undermine risk culture by creating pressure to exceed appetite for bonus purposes.

  2. Which quantitative risk aggregation method explicitly accounts for non-linear dependencies between risk factors using copulas?

    Answer: Copula-based dependency modeling

    Copula functions model the joint distribution of risks and can capture tail dependence that linear correlation matrices miss.

  3. A manufacturing company's ERM team identifies that a key supplier has a single point of failure. This is an example of which risk category?

    Answer: Operational/supply chain risk

    Single-supplier dependence is a concentration within supply chain operations, which falls under operational risk.

  4. The 'tone at the top' concept in ERM governance primarily refers to:

    Answer: Leadership's commitment to and modeling of ethical behavior and risk awareness

    Tone at the top describes how senior leaders set the ethical climate and demonstrate commitment to effective risk management through their actions.

  5. A risk practitioner applies a Bow-Tie diagram to a cyber breach scenario. What do the left side and right side of the diagram represent, respectively?

    Answer: Threats/causes and consequences/effects

    In a Bow-Tie diagram, the left side maps threat sources and preventive controls; the right side maps consequences and recovery controls.

  6. According to COSO ERM 2017, which principle specifically requires the organization to 'develop a portfolio view'?

    Answer: Principle 14 — Develops Portfolio View

    Principle 14 explicitly requires management to develop and evaluate a portfolio view of risk to understand aggregate exposure relative to risk appetite.

  7. When integrating ERM with strategic planning, the primary benefit is that risk considerations can:

    Answer: Inform strategy selection by revealing risk-adjusted trade-offs among strategic alternatives

    Integrating ERM with strategy allows leaders to compare strategic options on a risk-adjusted basis and select strategies aligned with risk appetite.