BMO Risk Management & Compliance 2

Question 1

What is Enterprise Risk Management (ERM) primarily designed to accomplish?

Accepted Answer

To provide a structured approach for identifying, assessing, and managing risks across the entire organization

Answer

To eliminate all organizational risks and guarantee operational success

Answer

To transfer financial liability for risks to external insurance providers

Answer

To satisfy regulatory requirements without actually changing operational practices

Question 2

Which framework is most commonly referenced for IT-related risk management and compliance in business organizations?

Accepted Answer

COBIT (Control Objectives for Information and Related Technologies)

Answer

ISO 9001

Answer

GAAP (Generally Accepted Accounting Principles)

Answer

OSHA 1910 Standards

Question 3

What is the primary role of an internal audit function within a compliance and risk management program?

Accepted Answer

To provide independent assurance that risk management and internal controls are operating effectively

Answer

To prepare and file the organization's annual tax returns

Answer

To manage day-to-day operational decisions in all business units

Answer

To negotiate contracts with external vendors and suppliers

Question 4

In risk management, what are the four primary risk treatment (response) options?

Accepted Answer

Accept, Avoid, Transfer, Mitigate

Answer

Report, Record, Review, Resolve

Answer

Assess, Plan, Implement, Monitor

Answer

Identify, Analyze, Prioritize, Eliminate

Question 5

What distinguishes a compliance audit from a financial audit?

Accepted Answer

Compliance audits evaluate adherence to laws, regulations, and policies, while financial audits focus on the accuracy of financial statements

Answer

Compliance audits are conducted only by external regulatory agencies, while financial audits are always internal

Answer

Compliance audits are less important than financial audits in regulated industries

Answer

Compliance audits only apply to public companies listed on stock exchanges

Question 6

What is the significance of 'tone at the top' in an organizational compliance program?

Accepted Answer

It describes senior leadership's visible commitment to ethical behavior, which drives the organization's compliance culture

Answer

It refers to the volume level of compliance training sessions in conference rooms

Answer

It is a regulatory requirement mandating that executives personally sign all compliance reports

Answer

It refers to the ranking of compliance priorities from most to least important

Question 7

A BMO is reviewing vendor contracts for compliance risk. Which clause type is most critical for managing third-party compliance obligations?

Accepted Answer

Right-to-audit clauses that allow the organization to inspect vendor compliance practices

Answer

Price escalation clauses that adjust vendor costs over time

Answer

Force majeure clauses that excuse performance during natural disasters

Answer

Arbitration clauses that resolve disputes outside of court