Practice Test Geeks(GRC) Governance, Risk, and Compliance Certification Practice Test
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Enterprise Risk Management Frameworks Flashcards

7 cards from real GRC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Enterprise Risk Management Frameworks flashcards as text

  1. Which quantitative technique uses repeated random sampling to model the probability distribution of risk outcomes?

    Answer: Monte Carlo simulation

    Monte Carlo simulation runs thousands of random scenarios to produce a probability distribution of possible outcomes, quantifying risk exposure.

  2. ISO 31000:2018 identifies 'communication and consultation' as a process that should occur at which stage of the risk management process?

    Answer: Throughout all stages of the risk management process

    ISO 31000 specifies that communication and consultation with stakeholders should be an ongoing activity throughout all stages of the risk management process.

  3. What is the purpose of scenario analysis in ERM?

    Answer: To explore plausible future states and assess their potential risk impacts

    Scenario analysis examines hypothetical but plausible situations to evaluate how different conditions could affect organizational risk exposure.

  4. Which COSO ERM 2017 component focuses on tracking performance against risk-adjusted targets and identifying changes in risk?

    Answer: Review and Revision

    Review and Revision involves monitoring the ERM program's effectiveness, tracking performance, and updating the approach as the risk landscape changes.

  5. A financial institution sets a maximum acceptable loss of $5 million from operational risk events per quarter. This figure most directly represents:

    Answer: Risk tolerance

    Risk tolerance is the specific, measurable boundary around acceptable variation in outcomes — it operationalizes the broader risk appetite statement.

  6. What is the role of the Chief Risk Officer (CRO) in an ERM program?

    Answer: Overseeing the ERM framework and ensuring risk is integrated into strategic decisions

    The CRO leads the ERM function, designs the risk framework, and ensures risk considerations are embedded in strategy and business processes.

  7. Which risk aggregation concept describes the situation where multiple, individually manageable risks combine to produce an unexpectedly large total exposure?

    Answer: Risk correlation

    Risk correlation describes how risks move together; highly correlated risks can aggregate to create losses far larger than independent assessment would suggest.