CCT Risk Management & Internal Controls 3

Question 1

In an enterprise risk management (ERM) framework, what is the purpose of a risk appetite statement?

Accepted Answer

To define the amount and type of risk the organization is willing to accept

Answer

A risk appetite statement formally articulates how much risk the board and senior management are willing to accept in pursuit of the organization's objectives.

Question 2

Which COSO ERM component focuses on selecting risk responses and deploying control activities to keep risk within appetite?

Accepted Answer

Performance

Answer

The Performance component of COSO ERM encompasses identifying, assessing, prioritizing risks, and implementing responses to manage them within the defined appetite.

Question 3

A compliance officer discovers that the same employee both approves vendor invoices and processes payments. This represents a failure of which control?

Accepted Answer

Segregation of duties

Answer

Segregation of duties requires that no single individual controls all stages of a transaction to reduce the opportunity for fraud or error.

Question 4

What is 'key risk indicator' (KRI) primarily used for in compliance programs?

Accepted Answer

Providing early warning signals of increasing risk exposure

Answer

KRIs are metrics that signal when risk levels are trending toward or beyond acceptable thresholds, enabling proactive intervention.

Question 5

Under the COSO Internal Control framework, which component directly addresses management's ongoing monitoring of control effectiveness?

Accepted Answer

Monitoring activities

Answer

The Monitoring Activities component requires ongoing evaluations and separate assessments to verify that internal controls continue to function as intended.

(CCT) Certified Compliance Technician Practice Test

(CCT) Certified Compliance Technician Practice Test

CCT Risk Management & Internal Controls 3