CRMA Risk Management Governance 2

Question 1

In the Three Lines of Defense model, which group is primarily responsible for owning and managing risks on a day-to-day basis?

Accepted Answer

Business unit management

Answer

Business unit management (the first line) owns and manages risks as part of their operational responsibilities.

Question 2

Which governance body holds ultimate accountability for ensuring an effective enterprise risk management framework exists?

Accepted Answer

Board of Directors

Answer

The board of directors bears ultimate accountability for the organization's risk governance framework.

Question 3

When a company separates the Risk Committee from the Audit Committee, what is the primary governance benefit?

Accepted Answer

It allows deeper focus on risk strategy versus financial reporting oversight

Answer

Separating the committees allows each to specialize — the Risk Committee focuses on strategic and operational risk while the Audit Committee focuses on financial reporting and controls.

Question 4

What is the most appropriate reporting line for a Chief Risk Officer (CRO) to maintain risk governance independence?

Accepted Answer

Chief Executive Officer or Board Risk Committee

Answer

The CRO should report to the CEO or directly to the Board Risk Committee to maintain sufficient independence and authority.

Question 5

Under the Three Lines of Defense model, the second line's primary governance role is to:

Accepted Answer

Oversee, challenge, and support first-line risk management activities

Answer

The second line (risk and compliance functions) oversees, challenges, and supports the first line rather than owning operational risk directly.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA Risk Management Governance 2