CRA Risk Identification & Assessment 5

Question 1

A risk architect is assessing supply chain risk and uses a technique that traces each material back to its origin through every tier of suppliers. Which technique is this?

Accepted Answer

Multi-tier Supply Chain Mapping

Answer

Multi-tier supply chain mapping traces materials and dependencies through all supplier tiers to identify hidden concentration, geographic, or geopolitical risks.

Question 2

In risk assessment, what does 'loss given default' (LGD) measure in credit risk?

Accepted Answer

The proportion of the exposure amount that is lost if a default occurs

Answer

LGD measures the fraction of the credit exposure that will not be recovered after a borrower defaults, net of any collateral or recovery proceeds.

Question 3

Which of the following is a limitation of using historical data alone for risk identification and assessment?

Accepted Answer

Past events may not capture novel or unprecedented risks that have never occurred before

Answer

Historical data cannot identify risks for which there is no precedent, such as entirely new technologies, black swan events, or novel threat actors.

Question 4

A risk architect identifies that the IT department's estimate of system downtime risk contradicts the operations team's estimate for the same risk. Which step should the architect take first?

Accepted Answer

Facilitate a structured workshop to reconcile differing perspectives and validate assumptions

Answer

Conflicting estimates reflect different assumptions and perspectives; a structured workshop aligns stakeholders, surfaces hidden context, and produces a more accurate shared estimate.

Question 5

Which risk metric expresses the expected loss that will not be exceeded at a given confidence level over a specified time horizon?

Accepted Answer

Value at Risk (VaR)

Answer

Value at Risk (VaR) quantifies the maximum loss not expected to be exceeded at a specified confidence level (e.g., 99%) over a defined time period.

(CRA) Certified Risk Architect Practice Test

(CRA) Certified Risk Architect Practice Test

CRA Risk Identification & Assessment 5