CPHR Risk Assessment and Management 3 — Questions and Answers
Question 1: During a workforce reduction, HR identifies a high risk of wrongful termination lawsuits. The FIRST step in managing this risk should be:
- Purchasing employment practices liability insurance
- Documenting performance issues and policy violations beforehand
- Establishing a risk register entry for the potential litigation (Correct answer)
- Notifying the board of directors of the potential exposure
Correct answer: Establishing a risk register entry for the potential litigation
The first step in managing an identified risk is to formally document it in the risk register so it can be assessed, prioritized, and treated systematically.
Question 2: Which type of employment law risk is specifically associated with failing to accommodate an employee's sincerely held religious beliefs?
- Disparate impact discrimination
- Hostile work environment harassment
- Failure to provide reasonable accommodation (Correct answer)
- Constructive dismissal
Correct answer: Failure to provide reasonable accommodation
Title VII of the Civil Rights Act requires employers to provide reasonable accommodation for sincerely held religious beliefs unless it creates undue hardship.
Question 3: A multinational company is expanding operations into a country with high political instability. The HR function's primary risk concern should be:
- Currency exchange rate fluctuations
- Employee safety and evacuation planning (Correct answer)
- Increased payroll processing costs
- Difficulty finding qualified local vendors
Correct answer: Employee safety and evacuation planning
In politically unstable regions, HR's primary risk concern is ensuring employee safety and having robust evacuation and crisis response plans in place.
Question 4: Which of the following BEST describes 'inherent risk' in HR risk management?
- Risk remaining after controls are applied
- Risk exposure before any controls or mitigation measures are implemented (Correct answer)
- Risk that cannot be transferred to a third party
- Risk specifically related to HR department operations
Correct answer: Risk exposure before any controls or mitigation measures are implemented
Inherent risk is the level of risk that exists in the absence of any controls, representing the raw exposure before mitigation efforts.
Question 5: An employer conducts background checks on all job candidates without disclosing this practice. This creates primary exposure under which federal law?
- Americans with Disabilities Act (ADA)
- Fair Credit Reporting Act (FCRA) (Correct answer)
- Equal Pay Act (EPA)
- Age Discrimination in Employment Act (ADEA)
Correct answer: Fair Credit Reporting Act (FCRA)
The FCRA requires employers to disclose background check use, obtain written consent, and provide adverse action notices before making employment decisions based on reports.
Question 6: A manufacturing plant experiences three serious near-miss incidents in one month. From a risk management perspective, the MOST appropriate HR response is to:
- Increase workers' compensation reserves
- Conduct a root cause analysis and implement corrective actions (Correct answer)
- Remind employees of the safety policy via email
- Transfer the operational risk to a staffing agency
Correct answer: Conduct a root cause analysis and implement corrective actions
Near-miss incidents are leading indicators of potential serious accidents; a root cause analysis followed by corrective actions is the proactive risk management response.
Question 7: When building a business continuity plan for the HR function, which HR process is typically classified as MOST critical to restore immediately after a disruption?
- Performance review cycles
- Payroll processing (Correct answer)
- Recruitment advertising
- Employee engagement surveys
Correct answer: Payroll processing
Payroll processing is a critical HR function because failure to pay employees on time creates legal liability and operational collapse, making it a top recovery priority.
CPHR Risk Assessment and Management 3
During a workforce reduction, HR identifies a high risk of wrongful termination lawsuits.
The FIRST step in managing this risk should be: