Risk Assessment & Mitigation Flashcards

Which risk is most critical when grading a diamond submitted alongside a GIA grading report?

Answer: Assuming the report is authentic without verification

Report fraud exists, so cross-referencing the laser inscription and physical characteristics against the document is essential before relying on it.

What is 'memo risk' in the diamond trade?

Answer: Risk that a stone on consignment is not returned or paid for

Memo (consignment) arrangements carry financial risk if the recipient defaults, loses, or damages the stone without paying.

When grading a parcel of melee diamonds, what is the primary risk to the grader?

Answer: Stone switching by the client

Melee parcels present stone-switching risk because individual small stones are virtually impossible to track without unique identifiers.

Which documentation practice best mitigates the risk of disputes after diamond grading?

Answer: Photographing the stone before and after grading

Before-and-after photographs provide objective visual evidence of a stone's condition and characteristics that is difficult to dispute.

Which practice best reduces the risk of accidental mixing of multiple clients' diamonds?

Answer: Using individually labeled containers for each submission

Individual labeled containers ensure each stone is tracked and physically separated from intake through return.

What risk does accepting a diamond for grading without completing an intake condition report create?

Answer: The grader may be held liable for pre-existing damage

Without documenting pre-existing chips or scratches at intake, the grader can be falsely blamed for damage that was already present.

Why is regular recalibration of carat scales an important risk mitigation step?

Answer: Scale drift can cause incorrect weight readings that directly affect value assessments

Even minor weight discrepancies can significantly affect a diamond's assessed value and expose the grader to client disputes.