CRMA Basic 2

Question 1

According to ISO 31000, what is the definition of risk?

Accepted Answer

The effect of uncertainty on objectives

Answer

ISO 31000 defines risk as 'the effect of uncertainty on objectives,' encompassing both positive and negative outcomes.

Question 2

Which component of COSO ERM directly addresses the 'tone at the top' of an organization?

Accepted Answer

Governance and Culture

Answer

The Governance and Culture component of COSO ERM establishes oversight responsibilities and desired behaviors, including tone at the top.

Question 3

What is 'risk appetite' as used in enterprise risk management?

Accepted Answer

The amount and type of risk an organization is willing to pursue or retain

Answer

Risk appetite is the amount and type of risk an organization is willing to pursue or retain in order to achieve its strategic objectives.

Question 4

In the three lines of defense model, which line is responsible for managing risk on a day-to-day basis?

Accepted Answer

Operational management

Answer

The first line of defense—operational management—owns and manages risk as part of daily business activities.

Question 5

Which type of risk response involves sharing a portion of the risk with a third party, such as an insurer?

Accepted Answer

Transfer

Answer

Risk transfer involves shifting some or all of the financial consequences of a risk to a third party, such as through insurance or outsourcing.

(CRMA) Certification in Risk Management Assurance Practice Test