CRMA Assessing Risk Appetite 3

Question 1

Which governance body bears ultimate responsibility for approving the organization's risk appetite?

Accepted Answer

The Board of Directors.

Answer

The board of directors holds ultimate accountability for governance and therefore is responsible for approving the organization's risk appetite.

Question 2

An internal auditor is reviewing a manufacturing company's risk appetite for workplace safety. Which finding would indicate the stated appetite is NOT effectively operationalized?

Accepted Answer

Incident rates are tracked monthly but never compared to appetite thresholds.

Answer

Tracking incident rates without comparing them to appetite thresholds means data exists but is not being used to manage risk within stated boundaries.

Question 3

A financial institution states it has a 'low appetite for liquidity risk.' Which control environment would be MOST consistent with this appetite?

Accepted Answer

Daily liquidity coverage ratio monitoring with automatic escalation triggers.

Answer

Daily monitoring with automatic escalation reflects the high vigilance and tight controls consistent with a low appetite for liquidity risk.

Question 4

When should an organization's risk appetite statement be formally reviewed?

Accepted Answer

At least annually and whenever there is a material change in strategy, environment, or key risks.

Answer

Risk appetite should be reviewed at least annually and triggered by material changes in strategy or risk environment to remain relevant and aligned.

Question 5

Which of the following BEST illustrates a qualitative risk appetite statement?

Accepted Answer

We will not pursue business opportunities that conflict with our ethical values.

Answer

Qualitative statements describe risk appetite in non-numeric, principle-based terms, such as ethical standards, rather than specific measurable thresholds.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA Assessing Risk Appetite 3