CRA ERM & COSO Framework 2

Question 1

Under COSO ERM 2017, which of the five components is most directly concerned with how risk appetite is communicated throughout the organization?

Accepted Answer

Information, Communication, and Reporting

Answer

Information, Communication, and Reporting ensures risk appetite and risk-related data flow across all levels of the organization.

Question 2

A company sets a risk appetite statement of 'low tolerance for regulatory non-compliance.' Which ERM action best operationalizes this statement?

Accepted Answer

Establishing key risk indicators tied to compliance thresholds with escalation triggers

Answer

KRIs with escalation triggers convert an appetite statement into actionable monitoring and response.

Question 3

In the COSO Internal Control — Integrated Framework (2013), which principle under the Control Environment component addresses the assignment of authority and responsibility?

Accepted Answer

Principle 3

Answer

Principle 3 states that management establishes structures, reporting lines, and appropriate authorities and responsibilities.

Question 4

Which ERM concept describes the total risk an entity can bear before it breaches its capital or operational limits?

Accepted Answer

Risk capacity

Answer

Risk capacity is the maximum risk an organization can absorb given its financial and operational resources.

Question 5

A retail bank's ERM program identifies concentration risk in commercial real estate loans. Under COSO ERM, which risk response category involves selling a portion of the loan portfolio to a third party?

Accepted Answer

Share

Answer

Sharing transfers a portion of the risk (and potential loss) to another party, such as through loan sales or syndications.

(CRA) Certified Risk Analyst Practice Test

(CRA) Certified Risk Analyst Practice Test

CRA ERM & COSO Framework 2