Enterprise Risk Management Flashcards
6 cards from real CIMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Enterprise Risk Management flashcards as text
According to CIMA, which of the following best describes 'enterprise risk management' (ERM)?
Answer: A comprehensive framework for identifying, assessing, and managing all risks across an organization
ERM is a comprehensive, organization-wide framework for identifying, assessing, and managing all categories of risk to support strategic objectives.
In risk management, what does a 'risk register' contain?
Answer: A record of identified risks, their likelihood, potential impact, and control measures
A risk register records all identified risks along with their likelihood, potential impact, risk owner, and the controls or mitigation strategies in place.
Which term describes the level of risk an organization is willing to accept in pursuit of its objectives?
Answer: Risk appetite
Risk appetite is the amount of risk an organization is willing to accept in pursuit of its strategic objectives, set by the board.
What is 'residual risk'?
Answer: The risk that remains after controls and mitigation measures have been applied
Residual risk is the level of risk remaining after management has implemented controls and mitigation measures to address inherent risks.
Which risk response involves an organization choosing not to pursue an activity because the risk is unacceptable?
Answer: Risk avoidance
Risk avoidance involves deciding not to proceed with an activity or withdraw from it entirely because the associated risk is too high.
In a risk heat map (risk matrix), risks are typically plotted on two dimensions. What are these dimensions?
Answer: Likelihood and impact
A risk heat map plots risks on a matrix with likelihood (probability) on one axis and impact (severity) on the other to prioritize risk management efforts.