Strategic Planning & Crisis Management Flashcards

A CRO is evaluating whether to recommend a new international market entry from a strategic risk perspective. Which analytical tool best supports this decision?

Answer: Country risk assessment integrated with enterprise risk appetite

Country risk assessment integrated with enterprise risk appetite provides a structured evaluation of political, economic, and operational risks relative to the organization's risk tolerance.

In the context of strategic crisis management, what does 'black swan' risk refer to?

Answer: A rare, unpredictable event with extreme consequences that falls outside normal expectations

Black swan events are characterized by their extreme rarity, severe impact, and the fact that they fall outside the range of regular expectations, making them difficult to plan for conventionally.

A CRO is asked to define the organization's 'risk capacity.' This concept is best described as:

Answer: The maximum level of risk the organization can absorb before its viability is threatened

Risk capacity represents the absolute maximum risk an organization can sustain without threatening its continued viability, forming the outer boundary of all risk decisions.

Which crisis management phase involves systematic evaluation of the crisis response to capture improvements for future preparedness?

Answer: Post-crisis review phase

The post-crisis review phase systematically evaluates what worked and what failed during the crisis response, generating actionable improvements for future preparedness.

A board asks the CRO to explain how strategic risks are differentiated from operational risks in the enterprise risk framework. The most accurate answer is:

Answer: Strategic risks arise from decisions or events that affect the organization's long-term objectives, while operational risks affect day-to-day processes

Strategic risks concern the organization's direction and long-term goal achievement, while operational risks relate to the execution failures in daily business processes.

When a crisis threatens to disrupt a critical third-party supplier, a CRO's FIRST action within the crisis management plan should be:

Answer: Activate the third-party contingency plan and assess the impact on critical business processes

Activating pre-established third-party contingency plans and assessing business process impact are the first steps to managing supply chain disruption effectively.

A CRO implements a 'Three Lines of Defense' model within the strategic risk function. Which line is responsible for setting the risk appetite and overall risk governance framework?

Answer: Second line (risk management and compliance functions)

The second line, encompassing the risk management and compliance functions, is responsible for establishing the risk appetite framework, policies, and oversight mechanisms.