CSM Risk Management & Corporate Governance 3

Question 1

The Three Lines of Defense model assigns risk ownership in the first line to which group?

Accepted Answer

Business operations and management

Answer

In the Three Lines of Defense model, the first line consists of business operations and management who own and manage risks day-to-day.

Question 2

Which of the following BEST describes a 'black swan' event in the context of strategic risk management?

Accepted Answer

A rare, high-impact event that was difficult to predict beforehand

Answer

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.

Question 3

Stakeholder theory in corporate governance argues that corporations should create value for which group?

Accepted Answer

All parties with a stake in the company's activities

Answer

Stakeholder theory holds that corporations must consider and balance the interests of all stakeholders, including employees, customers, suppliers, and communities.

Question 4

A company with strong corporate governance is LEAST likely to exhibit which characteristic?

Accepted Answer

Concentrated decision-making power in one executive

Answer

Good governance distributes power through checks and balances; concentrating authority in a single individual is a governance red flag.

Question 5

What does 'residual risk' refer to in enterprise risk management?

Accepted Answer

The level of risk remaining after controls are applied

Answer

Residual risk is the risk exposure that remains after implementing risk controls and mitigation measures.

(CSM) Certified Strategic Manager Practice Test

(CSM) Certified Strategic Manager Practice Test

CSM Risk Management & Corporate Governance 3