CRA - Certified Risk Architect Strategic Risk and Governance Questions and Answers

Question 1

Which of the following represents the most fundamental governance role of an organization's board of directors with respect to strategic risk?

Accepted Answer

Defining and formally approving the organization's overall risk appetite statement.

Answer

Reviewing and approving the mitigation plan for each individual high-priority risk.

Answer

Conducting the day-to-day monitoring of key risk indicators (KRIs).

Answer

Directly managing the internal audit function to ensure its independence.

Question 2

A global logistics company is developing its five-year strategic plan. To effectively integrate risk management into this process, what should be the risk architect's primary focus?

Accepted Answer

Facilitating an analysis of the risks and opportunities inherent in each proposed strategic alternative.

Answer

Compiling a comprehensive register of all known operational risks.

Answer

Ensuring the new strategy complies with all international shipping regulations.

Answer

Purchasing insurance policies to cover potential disruptions identified in the plan.

Question 3

Which of the following is the most defining characteristic of a strategic risk?

Accepted Answer

It has the potential to significantly impact an organization's ability to achieve its long-term objectives.

Answer

It arises from failures in day-to-day internal processes, people, or systems.

Answer

It can be fully mitigated through the implementation of robust internal controls.

Answer

It is typically associated with financial losses due to short-term market volatility.

Question 4

A new CEO wants to improve the company's risk governance and observes that while policies and procedures exist, employees often seem disengaged or fearful of reporting potential issues. Which action would be most effective in fostering a stronger risk culture?

Accepted Answer

Consistently demonstrating and communicating a commitment to ethical behavior and open dialogue about risk, starting with the board and senior leadership.

Answer

Implementing a new, advanced GRC (Governance, Risk, and Compliance) software platform.

Answer

Hiring a third-party firm to conduct all future risk assessments.

Answer

Creating a system of financial penalties for any employee associated with a control failure.

Question 5

In the 'Three Lines Model' of risk governance, which group is considered the first line, responsible for owning and managing risks as a direct part of their daily responsibilities?

Accepted Answer

Operational management and front-line staff who execute business activities.

Answer

The board of directors' audit and risk committees.

Answer

The internal audit function.

Answer

The enterprise risk management, compliance, and legal functions.

Question 6

A company's board has approved a risk appetite statement indicating a 'high' appetite for risks related to new product innovation. However, for a specific product launch, the project team is instructed that the budget cannot exceed the initial forecast by more than 5%. This specific 5% limit is best described as an example of:

Accepted Answer

Risk Tolerance

Answer

Risk Capacity

Answer

Inherent Risk

Answer

Strategic Risk