ACE Risk Management & Assessment

Question 1

What is the first step in the risk management process?

Accepted Answer

Risk identification — recognizing potential threats and vulnerabilities

Answer

Risk transfer — purchasing insurance immediately

Answer

Risk acceptance — deciding to live with all risks

Answer

Risk avoidance — canceling all activities

Question 2

What does a risk matrix assess?

Accepted Answer

The probability and impact of identified risks

Answer

Only the financial cost of risks

Answer

The number of employees affected

Answer

The timeline for risk resolution

Question 3

Which risk response strategy involves reducing the likelihood or impact of a risk?

Accepted Answer

Risk mitigation

Answer

Risk acceptance

Answer

Risk transfer

Answer

Risk escalation

Question 4

What is the purpose of a risk register?

Accepted Answer

To document, track, and manage all identified risks throughout a project or operation

Answer

To eliminate all risks before starting work

Answer

To assign blame when problems occur

Answer

To satisfy audit requirements only

Question 5

What distinguishes inherent risk from residual risk?

Accepted Answer

Inherent risk exists before controls; residual risk remains after controls are applied

Answer

Inherent risk is financial; residual risk is operational

Answer

Inherent risk is internal; residual risk is external

Answer

There is no meaningful difference between them

Question 6

Why is regular risk reassessment important?

Accepted Answer

Because the risk landscape changes as conditions, activities, and environments evolve

Answer

Because regulators require it exactly once per year

Answer

Because it provides work for risk management teams

Answer

Because initial assessments are always wrong