Financial Resilience & Budget Planning Flashcards
7 cards from real CRP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Resilience & Budget Planning flashcards as text
What is the primary purpose of a resilience budget within an organization?
Answer: To allocate financial resources for preparedness, response, and recovery activities
A resilience budget specifically allocates financial resources to activities that prepare for, respond to, and recover from disruptive events.
Which financial metric best indicates an organization's ability to absorb unexpected losses without compromising operations?
Answer: Liquidity ratio
The liquidity ratio measures how quickly an organization can access cash or near-cash assets to cover unexpected losses and maintain operations during disruption.
In organizational resilience, 'financial resilience' is best defined as:
Answer: The capacity to withstand financial shocks and recover to a stable financial state
Financial resilience refers to an organization's capacity to absorb financial shocks from disruptive events and return to a stable financial condition.
What type of insurance policy specifically compensates an organization for lost profits and ongoing expenses when operations are disrupted by a covered peril?
Answer: Business interruption insurance
Business interruption insurance compensates organizations for lost income and continuing fixed expenses when operations are disrupted by covered events such as fires or natural disasters.
What is the commonly recommended minimum cash reserve an organization should maintain to support resilience during a crisis?
Answer: Three to six months of operating expenses
Most resilience frameworks recommend maintaining three to six months of operating expenses as a liquid cash reserve to sustain operations through a significant disruptive event.
Which type of financial analysis quantifies the monetary consequences of operational disruptions to support recovery planning?
Answer: Financial impact analysis
Financial impact analysis specifically quantifies the monetary consequences of disruptive events, directly informing resource allocation decisions for recovery planning.
In the context of financial resilience, 'liquidity' refers to:
Answer: The ease with which assets can be converted to cash to meet immediate obligations
Liquidity describes how easily an organization can convert assets into cash to meet immediate financial obligations during or after a disruption.