Risk Assessment & Management Flashcards
7 cards from real CED 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 Assessment & Management flashcards as text
A nonprofit board member wants to personally guarantee a loan to the organization. Which risk concern should the executive director raise?
Answer: Conflict of interest that may compromise board member objectivity
A board member personally guaranteeing organizational loans creates a conflict of interest that can compromise independent governance.
An executive director notices that one staff member has sole control over accounts payable and bank reconciliation. This situation represents:
Answer: A lack of internal controls creating fraud risk
Concentrating financial duties in one person without oversight eliminates checks and balances, significantly increasing the risk of fraud or error.
In enterprise risk management (ERM), which element ensures that risk management is embedded throughout all organizational levels?
Answer: Risk culture and governance integration
ERM requires a risk-aware culture and governance integration so that risk thinking is embedded in decisions at every level of the organization.
Which scenario illustrates a 'transfer' strategy in risk management?
Answer: Purchasing general liability insurance for an annual gala
Purchasing insurance transfers the financial consequence of a risk event to the insurer.
What is a 'risk appetite' as used in executive-level risk management?
Answer: The amount and type of risk an organization is willing to accept in pursuit of its mission
Risk appetite defines how much risk an organization's leadership is prepared to accept while pursuing strategic objectives.
A severe weather event forces a nonprofit to close its main service facility for two weeks. This scenario is best addressed through which type of plan?
Answer: Business continuity plan
A business continuity plan outlines how an organization maintains essential operations during and after a disruptive event.
Which risk management tool visually displays risks based on their likelihood and potential impact?
Answer: Risk heat map
A risk heat map plots risks on a grid by probability and impact, helping leaders prioritize which risks require the most attention.