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ARM Strategic Risk Management Flashcards

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  1. What is the primary difference between risk management and strategic risk management?

    Answer: Risk management deals with day-to-day operations while strategic risk management addresses long-term organizational threats

    Strategic risk management specifically addresses risks that threaten long-term organizational objectives and competitive positioning, extending beyond daily operational concerns.

  2. A 'risk-adjusted return' measures:

    Answer: A performance measure that accounts for the level of risk assumed to generate the return

    Risk-adjusted return allows organizations to compare the profitability of different activities by factoring in the risks taken to achieve each return.

  3. In strategic risk management, which concept describes embedding risk considerations into all business decisions and processes?

    Answer: Risk integration

    Risk integration ensures that risk thinking is woven throughout strategic planning, decision-making, and daily operations across the organization.

  4. Reputational risk is best classified as:

    Answer: A strategic risk that can impact stakeholder relationships and organizational value

    Reputational risk is a strategic risk because damage to brand perception can significantly reduce organizational value and stakeholder trust.

  5. Which strategic risk management approach involves deliberately accepting higher risk to pursue greater potential returns?

    Answer: Risk exploitation

    Risk exploitation involves deliberately increasing exposure to certain risks to capitalize on the opportunities and returns they present.

  6. What does a risk register used in strategic risk management typically include?

    Answer: A list of identified risks with their assessments, owners, and treatment plans

    A risk register is a comprehensive document recording each identified risk along with its assessment, assigned owner, and planned treatment response.