Certified Internal Auditor Risk Assessment & Management 4

Question 1

Which of the following is the MOST important factor in determining audit universe prioritization during risk-based audit planning?

Accepted Answer

Results of the organization's risk assessment

Answer

Risk-based audit planning aligns audit resources with areas of highest risk as identified through the organization's risk assessment process.

Question 2

A company's board of directors has set a risk appetite of 'moderate.' A business unit is operating with a residual risk level assessed as 'high.' This situation is called:

Accepted Answer

Risk tolerance breach

Answer

When residual risk exceeds the stated risk appetite, the organization is experiencing a risk tolerance breach that requires escalation and corrective action.

Question 3

Which risk assessment approach involves assigning numerical probabilities and financial values to risk scenarios?

Accepted Answer

Quantitative risk assessment

Answer

Quantitative risk assessment uses mathematical models, probabilities, and monetary values to express risk exposure numerically.

Question 4

An internal auditor notices that management's risk register has not been updated for 18 months. This finding most directly indicates a weakness in:

Accepted Answer

Risk monitoring and review

Answer

A stale risk register signals that the organization's risk monitoring and review processes are not functioning effectively.

Question 5

Concentration risk in financial institutions refers to:

Accepted Answer

Excessive exposure to a single borrower, sector, or geography

Answer

Concentration risk arises when a portfolio is heavily exposed to a single counterparty, industry, or region, amplifying potential losses.

Certified Internal Auditor Practice Test

Certified Internal Auditor Practice Test

Certified Internal Auditor Risk Assessment & Management 4