Risk Management & Corporate Governance Flashcards
7 cards from real CSM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Management & Corporate Governance flashcards as text
Which board committee is primarily responsible for overseeing the integrity of a company's financial statements and internal controls?
Answer: Audit Committee
The Audit Committee oversees financial reporting, internal controls, and the external audit process to ensure integrity of financial statements.
A company's enterprise risk appetite statement should be MOST closely aligned with which of the following?
Answer: The strategic objectives and stakeholder expectations
Risk appetite must be calibrated to the organization's strategic objectives and what key stakeholders consider acceptable levels of uncertainty.
Which risk treatment option involves shifting potential financial loss to a third party, such as through insurance?
Answer: Risk transfer
Risk transfer moves the financial consequence of a risk to another party, most commonly through insurance or contractual arrangements.
In corporate governance, the concept of 'separation of powers' is best exemplified by which practice?
Answer: Separating the roles of CEO and Board Chair
Separating the CEO and Board Chair roles prevents excessive concentration of power and ensures independent oversight of management.
A risk heat map plots risks according to which two primary dimensions?
Answer: Likelihood and impact
A risk heat map visualizes risks by mapping their probability of occurrence (likelihood) against their potential consequence (impact).
Which governance principle states that board members must act in the best interest of the corporation rather than personal interests?
Answer: Duty of loyalty
The duty of loyalty requires directors to prioritize the corporation's interests over their own personal or financial interests.
An organization decides NOT to enter a new high-risk market segment after risk assessment. This decision is an example of which risk response?
Answer: Risk avoidance
Risk avoidance involves deciding not to pursue an activity that carries unacceptable risk, thereby eliminating that risk entirely.