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
The Three Lines of Defense model assigns risk ownership in the first line to which group?
Answer: Business operations and management
In the Three Lines of Defense model, the first line consists of business operations and management who own and manage risks day-to-day.
Which of the following BEST describes a 'black swan' event in the context of strategic risk management?
Answer: A rare, high-impact event that was difficult to predict beforehand
A black swan event is characterized by its extreme rarity, severe impact, and the tendency for people to rationalize it as predictable only after the fact.
Stakeholder theory in corporate governance argues that corporations should create value for which group?
Answer: All parties with a stake in the company's activities
Stakeholder theory holds that corporations must consider and balance the interests of all stakeholders, including employees, customers, suppliers, and communities.
A company with strong corporate governance is LEAST likely to exhibit which characteristic?
Answer: Concentrated decision-making power in one executive
Good governance distributes power through checks and balances; concentrating authority in a single individual is a governance red flag.
What does 'residual risk' refer to in enterprise risk management?
Answer: The level of risk remaining after controls are applied
Residual risk is the risk exposure that remains after implementing risk controls and mitigation measures.
Which scenario BEST illustrates a reputational risk for a publicly traded corporation?
Answer: A data breach exposing customer personal information
A data breach damages customer trust and public perception, which can have long-lasting effects on brand value and stakeholder relationships.
In the context of board governance, 'say on pay' refers to which shareholder right?
Answer: An advisory vote on executive compensation packages
'Say on pay' gives shareholders an advisory (typically non-binding) vote to express approval or disapproval of executive compensation practices.