CRMA Risk Management Frameworks 5

Question 1

In the Institute of Internal Auditors' Three Lines Model (2020), what is the primary role of the second line?

Accepted Answer

Supporting management's risk and control responsibilities through expertise and oversight

Answer

The second line provides expertise, support, and monitoring to assist first-line management in managing risk and controls effectively.

Question 2

Which action would MOST undermine the independence of the internal audit function (third line) in the Three Lines Model?

Accepted Answer

Having internal audit own and manage a key risk control

Answer

If internal audit owns a control, it cannot independently assure that control, creating a fundamental independence impairment.

Question 3

When implementing an ERM framework, which step should occur BEFORE selecting risk treatment options?

Accepted Answer

Conducting a risk assessment

Answer

Risk assessment — including identification, analysis, and evaluation — must precede treatment decisions so that responses are matched to actual risk exposures.

Question 4

A Chief Risk Officer (CRO) reporting directly to the CEO with no board access would be MOST problematic because:

Accepted Answer

It prevents independent risk escalation to the board, weakening governance

Answer

Without direct board access, the CRO cannot escalate risk concerns independently, allowing management to filter or suppress critical risk information.

Question 5

Which metric is MOST appropriate as a Key Risk Indicator (KRI) for monitoring operational risk in a financial institution?

Accepted Answer

Number of failed transactions per day

Answer

Failed transactions per day is a leading operational KRI that signals potential process breakdowns, system failures, or control weaknesses before they become losses.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA Risk Management Frameworks 5