CGRC Governance Principles 2 — Questions and Answers
Question 1: Which governance principle ensures that decision-makers are answerable for their actions and outcomes?
- Transparency
- Accountability (Correct answer)
- Stewardship
- Integrity
Correct answer: Accountability
Accountability means that individuals and entities must answer for their decisions, actions, and resulting outcomes.
Question 2: A board of directors delegates operational authority to management while retaining oversight. This structure best reflects which governance concept?
- Segregation of duties
- Principal-agent relationship (Correct answer)
- Checks and balances
- Span of control
Correct answer: Principal-agent relationship
The principal-agent relationship describes how principals (board) delegate authority to agents (management) while retaining oversight responsibilities.
Question 3: Which body is ultimately responsible for setting the risk appetite of an organization?
- Chief Risk Officer
- Internal Audit Committee
- Board of Directors (Correct answer)
- Senior Management
Correct answer: Board of Directors
The Board of Directors holds ultimate responsibility for defining and approving the organization's risk appetite.
Question 4: The Three Lines of Defense model assigns risk ownership to which line?
- Second line — risk and compliance functions
- Third line — internal audit
- First line — operational management (Correct answer)
- Fourth line — external auditors
Correct answer: First line — operational management
The first line (operational management) owns and manages risks as part of day-to-day business activities.
Question 5: Which governance document formally defines the authority, responsibilities, and membership of a board committee?
- Policy statement
- Committee charter (Correct answer)
- Risk register
- Strategic plan
Correct answer: Committee charter
A committee charter formally establishes the authority, scope, responsibilities, and composition of a board committee.
Question 6: An organization's governance framework should be reviewed and updated at minimum:
- Every five years
- Only after a regulatory change
- Periodically, at least annually (Correct answer)
- Only when the CEO changes
Correct answer: Periodically, at least annually
Governance frameworks should be reviewed periodically—at least annually—to remain aligned with organizational strategy and regulatory requirements.
Question 7: Which principle of good governance requires that stakeholders have access to timely, accurate, and relevant information?
- Transparency (Correct answer)
- Efficiency
- Proportionality
- Sustainability
Correct answer: Transparency
Transparency requires that relevant information be openly disclosed to stakeholders in a timely and accurate manner.
CGRC Governance Principles 2
Which governance principle ensures that decision-makers are answerable for their actions and outcomes?