CRA Risk Mitigation Strategies & Decision-Making

Question 1

What is risk mitigation?

Accepted Answer

Reducing risk impact or likelihood

Answer

Risk mitigation involves taking proactive steps to reduce the likelihood of a risk occurring or to lessen the severity of its impact if it does materialize. This strategy focuses on controlling potential threats rather than simply accepting or ignoring them. By implementing various measures, organizations aim to minimize the negative consequences associated with identified risks.

Question 2

What is the purpose of a contingency plan?

Accepted Answer

To respond to risk events quickly

Answer

The primary purpose of a contingency plan is to provide a pre-defined course of action to be followed when a specific risk event occurs. This allows an organization to respond quickly and effectively to unforeseen circumstances or crises. By having a plan in place, potential damage and disruption can be minimized, ensuring business continuity.

Question 3

Which is a proactive risk mitigation strategy?

Accepted Answer

Avoidance

Answer

Avoidance is considered a proactive risk mitigation strategy because it involves taking action before a risk event occurs to eliminate the risk entirely. This might mean changing project plans, altering business processes, or deciding not to undertake an activity that carries a specific risk. By avoiding the risk, its potential impact is completely nullified.

Question 4

What tool helps prioritize risk mitigation efforts?

Accepted Answer

Risk matrix

Answer

A risk matrix is a powerful tool used to prioritize risk mitigation efforts by visually plotting risks based on their likelihood and potential impact. This allows organizations to quickly identify which risks are most critical (high likelihood, high impact) and require immediate attention. By prioritizing, resources can be allocated efficiently to address the most significant threats.

Question 5

What is risk transference?

Accepted Answer

Outsourcing or insuring against the risk

Answer

Risk transference is a strategy where the financial responsibility or consequences of a risk are shifted to a third party. This is most commonly achieved through purchasing insurance, where an insurer agrees to cover potential losses, or by outsourcing a risky activity to another entity. The goal is to offload the burden of a potential loss to someone else.

(CRA) Certified Risk Analyst Practice Test

(CRA) Certified Risk Analyst Practice Test

CRA Risk Mitigation Strategies & Decision-Making