CAP Risk Management & Mitigation 4

Question 1

A lender's credit-scoring model systematically disadvantages a protected demographic group. Which categories of risk does this primarily create?

Accepted Answer

Ethical, regulatory, and reputational risk

Answer

Biased model outcomes expose the organization to ethical violations, regulatory penalties, and reputational damage even if accuracy is high.

Question 2

Which technique helps quantify how sensitive a model's recommendation is to uncertainty in its input assumptions?

Accepted Answer

Sensitivity analysis or Monte Carlo simulation

Answer

Sensitivity analysis and Monte Carlo simulation vary uncertain inputs to show how much outputs and decisions could change.

Question 3

What is the primary risk of using a single analyst's undocumented workflow to produce recurring business-critical reports?

Accepted Answer

Key-person dependency, making the process unrepeatable if the analyst leaves

Answer

Undocumented single-person processes create key-person risk, threatening continuity and reproducibility.

Question 4

A project team lists 'regulatory approval delayed' as a risk with high impact but very low probability. According to standard risk management, how should this typically be handled?

Accepted Answer

Keep it on a watch list and define a contingency response given the high impact

Answer

Low-probability, high-impact risks warrant monitoring and a contingency plan rather than removal or project cancellation.

Question 5

Which action best mitigates the risk of data leakage between training and test sets in a predictive modeling project?

Accepted Answer

Strictly separating holdout data before any preprocessing or feature engineering

Answer

Partitioning data before preprocessing prevents information from the test set from influencing the model and inflating performance estimates.

(CAP) Certified Analytics Professional Practice Test

(CAP) Certified Analytics Professional Practice Test

CAP Risk Management & Mitigation 4