BMO Risk Management & Compliance 3

Question 1

What is a Business Impact Analysis (BIA) and when is it primarily used?

Accepted Answer

An assessment that identifies critical business functions and evaluates the potential effects of disruptions on operations

Answer

A financial tool used to calculate return on investment for new business initiatives

Answer

A compliance document required by OSHA for workplace safety inspections

Answer

A strategic planning tool that compares business performance against industry benchmarks

Question 2

What is the Sarbanes-Oxley Act (SOX) primarily concerned with in the context of business management compliance?

Accepted Answer

Corporate financial reporting integrity and accountability for public companies

Answer

Environmental protection and sustainability reporting requirements for manufacturers

Answer

Workplace safety standards and employee health regulations

Answer

Data privacy protections for consumer personal information

Question 3

In risk management, what are 'leading indicators' as opposed to 'lagging indicators'?

Accepted Answer

Leading indicators are predictive metrics that signal potential future risks before they materialize, while lagging indicators measure outcomes after they occur

Answer

Leading indicators measure past performance outcomes, while lagging indicators predict future risks

Answer

Leading indicators are required regulatory metrics, while lagging indicators are optional internal measures

Answer

Leading indicators apply only to financial risks, while lagging indicators cover operational risks

Question 4

What is reputational risk in the context of business management and why is it particularly challenging to manage?

Accepted Answer

It is the risk of damage to an organization's public standing and stakeholder trust, which is difficult to quantify and can amplify other risks

Answer

It is the risk of brand trademark infringement by competitors, managed through intellectual property law

Answer

It is the risk that advertising campaigns will not generate sufficient customer awareness

Answer

It is the risk of negative employee reviews on public job posting websites

Question 5

What is the purpose of whistleblower protection policies within a compliance program?

Accepted Answer

To ensure that employees who report misconduct are shielded from retaliation and to encourage reporting of violations

Answer

To prevent employees from sharing confidential business information with competitors

Answer

To legally protect the organization from liability when employees report compliance concerns externally

Answer

To restrict communications between employees and regulatory agencies without management approval

Question 6

Which risk management concept describes the maximum acceptable downtime for a critical business process before unacceptable consequences occur?

Accepted Answer

Recovery Time Objective (RTO)

Answer

Risk Tolerance Threshold (RTT)

Answer

Risk Transfer Limit (RTL)

Answer

Residual Risk Benchmark (RRB)

Question 7

When performing a risk assessment using a risk matrix, which combination of factors determines a risk's overall rating?

Accepted Answer

Likelihood of the risk occurring and the severity of its potential impact

Answer

Cost of mitigation and the number of employees affected by the risk

Answer

Time required to resolve the risk and the department responsible for it

Answer

The regulatory penalty for the risk and the frequency of audit findings