COM Risk Assessment & Mitigation 3 — Questions and Answers
Question 1: Which risk identification technique gathers expert opinions through iterative anonymous rounds to reach consensus?
- SWOT analysis
- Delphi technique (Correct answer)
- Brainstorming
- Root cause analysis
Correct answer: Delphi technique
The Delphi technique uses structured rounds of anonymous expert questionnaires, with feedback shared between rounds until consensus emerges.
Question 2: A business continuity plan (BCP) is BEST described as:
- A plan to prevent all operational disruptions
- A financial reserve fund for emergencies
- A documented strategy to maintain critical functions during and after a disruption (Correct answer)
- An insurance policy for physical assets
Correct answer: A documented strategy to maintain critical functions during and after a disruption
A BCP outlines procedures and resources needed to keep essential operations running during crises such as natural disasters or system failures.
Question 3: The 'residual risk' in operations refers to:
- Risks that have already materialized
- Risk remaining after controls and mitigation measures have been applied (Correct answer)
- The total sum of all identified risks
- Risks transferred to a third party
Correct answer: Risk remaining after controls and mitigation measures have been applied
Residual risk is the level of risk that persists after all risk controls and mitigation actions have been implemented.
Question 4: In supply chain risk management, 'safety stock' is primarily used to mitigate which risk?
- Currency fluctuation risk
- Demand variability and supply disruption risk (Correct answer)
- Reputational risk from product recalls
- Regulatory compliance risk
Correct answer: Demand variability and supply disruption risk
Safety stock acts as a buffer inventory to absorb unexpected demand spikes or supply delays, reducing stockout risk.
Question 5: Which of the following best describes a 'black swan' event in risk management?
- A highly probable, low-impact event
- A routine operational failure caught by controls
- A rare, unpredictable event with extreme consequences (Correct answer)
- A regulatory change that was widely anticipated
Correct answer: A rare, unpredictable event with extreme consequences
Black swan events are characterized by their rarity, severe impact, and the fact that they appear obvious only in retrospect.
Question 6: A Key Risk Indicator (KRI) differs from a Key Performance Indicator (KPI) in that a KRI:
- Measures past performance results
- Provides an early warning signal of increasing risk exposure (Correct answer)
- Tracks financial returns on investment
- Measures customer satisfaction levels
Correct answer: Provides an early warning signal of increasing risk exposure
KRIs are forward-looking metrics that signal when risk levels are increasing, allowing proactive intervention before a loss occurs.
Question 7: Which risk mitigation approach reduces risk by making an undesirable outcome less severe if it does occur?
- Risk avoidance
- Loss prevention
- Loss reduction (Correct answer)
- Risk transfer
Correct answer: Loss reduction
Loss reduction controls (like fire suppression systems) aim to minimize the damage or severity when a risk event happens, rather than preventing it entirely.
COM Risk Assessment & Mitigation 3
Which risk identification technique gathers expert opinions through iterative anonymous rounds to reach consensus?