CFC CFC Risk Management & Insurance

Question 1

Which risk management framework is most commonly referenced by US financial controllers for enterprise-wide risk oversight?

Accepted Answer

COSO ERM Framework

Answer

The COSO Enterprise Risk Management (ERM) Framework is the leading standard US financial controllers use to identify, assess, and respond to enterprise-wide risks.

Question 2

A financial controller identifying risks that could prevent the company from achieving its strategic objectives is performing which step of the ERM process?

Accepted Answer

Risk identification

Answer

Risk identification is the process of recognizing potential events or conditions that could negatively impact the achievement of organizational objectives.

Question 3

What does 'residual risk' mean in the context of enterprise risk management?

Accepted Answer

Risk remaining after controls are applied

Answer

Residual risk is the level of risk that remains after management has implemented controls and other risk responses.

Question 4

Which type of insurance protects a company's directors and officers against personal losses from lawsuits alleging wrongful acts in their capacity as leaders?

Accepted Answer

D&O Insurance

Answer

Directors and Officers (D&O) insurance covers legal defense costs and damages for claims alleging wrongful acts by corporate leaders.

Question 5

A financial controller calculates that a risk event has a 20% probability and a $500,000 potential impact. What is the expected monetary value (EMV) of this risk?

Accepted Answer

$100,000

Answer

EMV is calculated by multiplying the probability by the impact: 20% × $500,000 = $100,000.

(CFC) Certified Financial Controller Practice Test

(CFC) Certified Financial Controller Practice Test

CFC CFC Risk Management & Insurance