CIMA Enterprise Risk Management 1

Question 1

According to CIMA, which of the following best describes 'enterprise risk management' (ERM)?

Accepted Answer

A comprehensive framework for identifying, assessing, and managing all risks across an organization

Answer

ERM is a comprehensive, organization-wide framework for identifying, assessing, and managing all categories of risk to support strategic objectives.

Question 2

In risk management, what does a 'risk register' contain?

Accepted Answer

A record of identified risks, their likelihood, potential impact, and control measures

Answer

A risk register records all identified risks along with their likelihood, potential impact, risk owner, and the controls or mitigation strategies in place.

Question 3

Which term describes the level of risk an organization is willing to accept in pursuit of its objectives?

Accepted Answer

Risk appetite

Answer

Risk appetite is the amount of risk an organization is willing to accept in pursuit of its strategic objectives, set by the board.

Question 4

What is 'residual risk'?

Accepted Answer

The risk that remains after controls and mitigation measures have been applied

Answer

Residual risk is the level of risk remaining after management has implemented controls and mitigation measures to address inherent risks.

Question 5

Which risk response involves an organization choosing not to pursue an activity because the risk is unacceptable?

Accepted Answer

Risk avoidance

Answer

Risk avoidance involves deciding not to proceed with an activity or withdraw from it entirely because the associated risk is too high.

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA - Chartered Institute of Management Accountants Aptitude Test Practice Test

CIMA Enterprise Risk Management 1