CRMA Risk Identification and Analysis 2 — Questions and Answers
Question 1: Which risk identification technique involves systematically examining each component of a process to determine what could go wrong at each step?
- Root cause analysis
- Failure Mode and Effects Analysis (FMEA) (Correct answer)
- Delphi technique
- Monte Carlo simulation
Correct answer: Failure Mode and Effects Analysis (FMEA)
FMEA examines each process component to identify potential failure modes, their effects, and severity.
Question 2: A risk owner is best described as the individual who:
- Approves the risk management budget
- Has accountability for monitoring and responding to a specific risk (Correct answer)
- Identifies all risks in the enterprise risk register
- Chairs the risk management committee
Correct answer: Has accountability for monitoring and responding to a specific risk
A risk owner is the person accountable for monitoring a specific risk and ensuring appropriate responses are implemented.
Question 3: In risk analysis, 'velocity' refers to:
- The speed at which a risk mitigation plan is implemented
- How quickly a risk event could impact the organization once triggered (Correct answer)
- The rate at which new risks are identified
- The pace of residual risk reduction over time
Correct answer: How quickly a risk event could impact the organization once triggered
Velocity (or speed of onset) measures how quickly a risk materializes and affects the organization after it is triggered.
Question 4: Which of the following best describes a 'bow-tie' risk analysis model?
- A matrix plotting likelihood against impact for multiple risks
- A diagram showing causes on the left, the risk event in the center, and consequences on the right (Correct answer)
- A heat map of residual risks after controls
- A timeline of risk events over a fiscal year
Correct answer: A diagram showing causes on the left, the risk event in the center, and consequences on the right
The bow-tie model visually connects threat causes (left side) through a hazard/risk event to consequences (right side), with controls on both sides.
Question 5: When using scenario analysis for risk identification, the primary benefit is:
- Reducing the time needed to document risks
- Exploring plausible future states to uncover risks that may not be apparent in current operations (Correct answer)
- Eliminating the need for quantitative risk models
- Automating the risk register update process
Correct answer: Exploring plausible future states to uncover risks that may not be apparent in current operations
Scenario analysis helps organizations anticipate risks by examining hypothetical but plausible future situations.
Question 6: A company discovers that two previously independent risks now share a common trigger event. This relationship is best described as:
- Risk velocity
- Risk correlation (Correct answer)
- Risk appetite
- Risk tolerance
Correct answer: Risk correlation
Risk correlation occurs when two or more risks are related or move together, especially when sharing common causes or triggers.
Question 7: Which of the following is a key limitation of using only historical data for risk identification?
- Historical data is too expensive to collect
- It may not capture emerging or novel risks with no prior occurrence (Correct answer)
- It overstates the likelihood of low-probability risks
- It cannot be used in quantitative risk models
Correct answer: It may not capture emerging or novel risks with no prior occurrence
Historical data reflects past events and may miss entirely new risk categories, disruptive technologies, or unprecedented scenarios.
CRMA Risk Identification and Analysis 2
Which risk identification technique involves systematically examining each component of a process to determine what could go wrong at each step?