CPFM Financial Risk Management 4

Question 1

Operational risk includes losses arising from:

Accepted Answer

Failed internal processes, people, systems, or external events

Answer

Operational risk stems from inadequate or failed processes, human error, systems failures, or external events.

Question 2

A risk register is primarily used to:

Accepted Answer

Document, assess, and track identified risks and their controls

Answer

A risk register catalogs identified risks along with their likelihood, impact, owners, and mitigation actions.

Question 3

In a risk matrix, risks are typically prioritized by combining:

Accepted Answer

Likelihood and impact

Answer

Risk matrices rank risks by multiplying or plotting probability of occurrence against severity of impact.

Question 4

Which response is an example of risk avoidance?

Accepted Answer

Declining to enter a market deemed too risky

Answer

Risk avoidance means not undertaking the activity that creates the risk in the first place.

Question 5

Hedging with a forward contract locks in:

Accepted Answer

A predetermined future price or rate

Answer

A forward contract fixes the price or exchange rate for a future transaction, removing uncertainty.

CPFM Practice Test