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 risk management approach involves accepting a risk but preparing a pre-defined response plan if it materializes?
Answer: Contingency planning (risk acceptance with response)
Contingency planning accepts that a risk may occur but prepares a structured response to minimize impact when it does materialize.
The Sarbanes-Oxley Act (SOX) Section 404 requires management to do which of the following?
Answer: Assess and report on the effectiveness of internal controls over financial reporting
SOX Section 404 mandates that management assess and report on the effectiveness of internal controls over financial reporting, with external auditor attestation.
A risk register MOST commonly includes which combination of information?
Answer: Risk description, likelihood, impact, and assigned owner
A risk register documents each identified risk along with its probability, potential impact, risk owner, and current mitigation status.
Which type of corporate governance structure gives shareholders the greatest direct power over board composition?
Answer: Annual election of all board directors
Annual elections of all directors allow shareholders to replace the entire board each year, maximizing shareholder influence over governance.
An organization conducts a 'failure mode and effects analysis' (FMEA) as part of its risk process. This tool is MOST useful for assessing which type of risk?
Answer: Operational process and product failure risks
FMEA systematically identifies potential failure points within processes or products and evaluates their effects, making it ideal for operational risk assessment.
In ESG governance frameworks, the 'G' (Governance) pillar is MOST concerned with which factor?
Answer: Board composition, executive pay, and shareholder rights
The Governance pillar in ESG focuses on how a company is led and controlled, including board structure, executive compensation, and shareholder rights.
When a strategic risk has a low probability but catastrophic potential impact, the MOST appropriate management response is typically to:
Answer: Develop scenario-based contingency plans and monitor trigger indicators
Low-probability, high-impact risks warrant contingency planning and monitoring of early warning indicators rather than dismissal or full transfer.