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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.

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  1. Which international framework provides guidance on enterprise risk management and is widely used by large corporations?

    Answer: COSO ERM Framework

    The COSO Enterprise Risk Management (ERM) Framework is the leading international standard guiding organizations in integrated risk management.

  2. A board's decision to require management to obtain board approval for any acquisition above $50 million is BEST described as which governance tool?

    Answer: Board reserved matter

    Reserved matters are decisions that the board explicitly retains authority over and cannot be delegated to management without board approval.

  3. Scenario analysis in strategic risk management is PRIMARILY used to:

    Answer: Explore the impact of plausible future states on strategy

    Scenario analysis helps organizations examine how different plausible futures might affect their strategy, enabling proactive risk planning.

  4. Which corporate governance issue does the 'principal-agent problem' PRIMARILY address?

    Answer: The misalignment of interests between owners (principals) and managers (agents)

    The principal-agent problem arises when managers (agents) may act in their own interests rather than those of shareholders (principals) who employ them.

  5. A company implements whistleblower protection policies primarily to mitigate which category of risk?

    Answer: Compliance and ethical risk

    Whistleblower protections encourage reporting of unethical or illegal conduct, helping detect compliance violations before they escalate.

  6. Which financial metric is commonly used as a key risk indicator (KRI) for liquidity risk in corporate treasury management?

    Answer: Current ratio

    The current ratio (current assets ÷ current liabilities) measures a company's ability to meet short-term obligations, making it a standard liquidity KRI.

  7. In corporate governance, an 'independent director' is BEST characterized by which attribute?

    Answer: Having no material relationship with the company that could impair judgment

    Independent directors must be free of any material relationship with the company to ensure they can exercise objective judgment on behalf of shareholders.