IFA IFA Corporate Governance & Risk Management

Question 1

What is corporate governance?

Accepted Answer

The system by which companies are directed and controlled to balance the interests of stakeholders

Answer

Corporate governance encompasses the structures, rules, and processes by which a company is directed and controlled, ensuring accountability to shareholders and other stakeholders.

Question 2

What is the primary role of a company's board of directors?

Accepted Answer

To provide strategic oversight, monitor management, and safeguard shareholder interests

Answer

The board of directors provides strategic direction, oversees management performance, ensures appropriate risk management, and is accountable to shareholders for the company's governance.

Question 3

What distinguishes non-executive directors (NEDs) from executive directors?

Accepted Answer

NEDs are not employed full-time by the company and bring independent oversight without managing operations

Answer

Non-executive directors are independent of management and operations, bringing objective scrutiny and representing shareholder interests without involvement in day-to-day management.

Question 4

What is an enterprise risk management (ERM) framework?

Accepted Answer

A structured approach to identifying, assessing, and managing risks across the entire organization

Answer

ERM provides a comprehensive, organization-wide approach to identifying all material risks, assessing their likelihood and impact, and implementing responses to manage them within risk appetite.

Question 5

Which governance principle ensures that decision-makers are answerable for their actions?

Accepted Answer

Accountability

Answer

Accountability requires that directors and managers are responsible and answerable for their decisions and actions to shareholders and other stakeholders.

(IFA) Institute of Financial Accountants Certification Practice Test

(IFA) Institute of Financial Accountants Certification Practice Test

IFA IFA Corporate Governance & Risk Management