BMO Risk Management & Compliance

Question 1

What is the primary purpose of a risk register in an organization?

Accepted Answer

To document identified risks, their likelihood, impact, and mitigation strategies

Answer

To record all financial transactions for audit purposes

Answer

To list all employees responsible for safety violations

Answer

To track regulatory fines and penalties assessed against the organization

Question 2

Which of the following best defines 'residual risk' in a business management context?

Accepted Answer

The risk remaining after controls and mitigation measures have been implemented

Answer

The total risk before any controls are applied

Answer

The financial cost of all identified risks combined

Answer

The risk transferred to a third-party vendor or insurer

Question 3

In risk management, what does the acronym COSO stand for?

Accepted Answer

Committee of Sponsoring Organizations of the Treadway Commission

Answer

Certified Officers of Strategic Operations

Answer

Compliance and Oversight Standards Organization

Answer

Corporate Operations and Security Office

Question 4

Which type of risk control is specifically designed to PREVENT a risk event from occurring in the first place?

Accepted Answer

Preventive control

Answer

Detective control

Answer

Corrective control

Answer

Compensating control

Question 5

What is 'risk appetite' in an organizational risk management framework?

Accepted Answer

The amount and type of risk an organization is willing to accept in pursuit of its objectives

Answer

The total financial budget allocated to risk management activities

Answer

The maximum number of risk events an organization can experience annually

Answer

The legal threshold at which risks must be reported to regulators

Question 6

A business management officer discovers a significant compliance gap during an internal review. What is the MOST appropriate immediate action?

Accepted Answer

Document the finding, notify appropriate stakeholders, and develop a corrective action plan

Answer

Terminate the employees responsible for the gap

Answer

Report the gap directly to external regulators before conducting any internal review

Answer

Delay reporting until the gap can be resolved to avoid organizational embarrassment

Question 7

Which of the following is a key element of an effective organizational compliance program according to U.S. Federal Sentencing Guidelines?

Accepted Answer

Implementing high ethical standards and having designated compliance personnel with authority

Answer

Outsourcing all compliance functions to an external consulting firm

Answer

Limiting compliance training only to senior management and executives

Answer

Keeping all compliance investigations confidential from the board of directors