CS Risk Management & Mitigation 5

Question 1

A chief strategy officer requests a 'risk-adjusted return' analysis. This metric integrates:

Accepted Answer

Expected financial return weighted against the probability and impact of associated risks

Answer

Risk-adjusted return balances the potential financial gain of a strategy against the probability-weighted cost of risks that could erode that gain.

Question 2

Which of the following scenarios exemplifies 'risk concentration' at the strategic level?

Accepted Answer

Generating 80% of revenue from a single customer

Answer

Risk concentration occurs when a disproportionate share of exposure is tied to a single source, such as one dominant customer, creating vulnerability.

Question 3

A strategist is using a bow-tie model for risk analysis. What does the 'left side' of the bow-tie represent?

Accepted Answer

Causes and threat pathways leading to the risk event

Answer

In the bow-tie model, the left side maps threats and causes that can lead to the central risk event, while the right side maps consequences.

Question 4

Under the COSO ERM framework, which component ensures that risk management activities are embedded into day-to-day operations?

Accepted Answer

Control Activities

Answer

Control Activities are the policies and procedures that operationalize risk responses, embedding risk management directly into business processes.

Question 5

A scenario planning session identifies a risk triggered by geopolitical instability affecting raw material supply. This is classified as which risk category?

Accepted Answer

External/environmental risk

Answer

Geopolitical instability is an external environmental risk that originates outside the organization and is largely beyond its direct control.

(CS) Certified Strategist Practice Test

(CS) Certified Strategist Practice Test

CS Risk Management & Mitigation 5