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Risk Management and Compliance Flashcards

7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Risk Management and Compliance flashcards as text

  1. A force majeure clause in a commercial contract is intended to:

    Answer: Excuse non-performance caused by extraordinary events beyond a party's control

    Force majeure clauses relieve a party of contractual obligations when performance is prevented by unforeseeable, extraordinary events outside their control.

  2. The 'risk appetite' of an organization is best described as:

    Answer: The amount and type of risk the organization is willing to accept in pursuit of its objectives

    Risk appetite defines the boundaries of acceptable risk-taking aligned with the organization's strategy and stakeholder expectations.

  3. A company discovers it is unknowingly doing business with an entity on the OFAC Specially Designated Nationals (SDN) list. The MOST immediate action should be:

    Answer: Halt transactions, freeze assets as required, and report to OFAC

    Upon discovering an SDN match, organizations must immediately freeze assets, cease transactions, and file a report with OFAC to avoid severe penalties.

  4. Which risk treatment option involves purchasing insurance?

    Answer: Risk transfer

    Purchasing insurance transfers the financial consequences of a risk to an insurer in exchange for a premium payment.

  5. A compliance program's effectiveness is BEST measured by:

    Answer: Reduction in compliance incidents, audit findings, and employee awareness scores

    Effective compliance programs are measured by outcomes — fewer violations, lower audit findings, and higher employee understanding — not inputs.

  6. In quantitative risk analysis, 'Expected Monetary Value' (EMV) is calculated as:

    Answer: Probability of the risk multiplied by its monetary impact

    EMV = Probability × Impact, providing a probability-weighted estimate of the financial consequence of a risk event.

  7. A non-disclosure agreement (NDA) is primarily used to manage which type of commercial risk?

    Answer: Confidentiality and intellectual property risk

    NDAs contractually protect proprietary information and trade secrets, directly managing the risk of unauthorized disclosure of confidential information.