Risk Management Flashcards

Which committee is primarily responsible for risk oversight at the board level in a publicly traded US company?

Answer: Audit committee

The audit committee typically oversees the organization's risk management framework and internal control environment at the board level.

Expected Monetary Value (EMV) is calculated as:

Answer: Probability × Impact

EMV is the product of the probability of a risk event occurring and its monetary impact, used to prioritize risk responses.

Which of the following is an example of reputational risk?

Answer: A data breach exposing customer personal information leading to public backlash

Reputational risk involves damage to an organization's brand or public standing, such as negative publicity following a data breach.

A risk that has been identified but for which management has consciously decided to do nothing is said to be:

Answer: Accepted

Risk acceptance (also called risk retention) is when an organization acknowledges a risk and chooses to bear any resulting loss without further action.

In the context of supply chain risk, 'single sourcing' increases which type of risk?

Answer: Concentration risk

Relying on a single supplier concentrates dependency risk — if that supplier fails, the entire supply is disrupted.

Business continuity planning (BCP) is designed primarily to:

Answer: Ensure critical operations can continue or recover quickly after a disruption

BCP focuses on maintaining or rapidly restoring essential business functions following a significant disruption event.

Which of the following risk indicators would be considered a lagging indicator?

Answer: Number of customer complaints received last quarter

Lagging indicators measure outcomes that have already occurred, such as complaint counts, rather than predicting future risk events.