Risk Assessment & Management Flashcards
7 cards from real NES 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 Assessment & Management flashcards as text
When conducting a qualitative risk assessment, which approach is most commonly used?
Answer: Rating risks using descriptive scales such as high, medium, and low
Qualitative risk assessment uses descriptive ratings and expert judgment rather than precise numerical calculations to rank risks.
A 'risk owner' in an organization is best described as:
Answer: The individual accountable for monitoring and managing a specific risk
A risk owner is assigned accountability for overseeing and responding to a particular risk within an organization.
Which of the following best describes 'inherent risk'?
Answer: Risk level before any controls or mitigations are applied
Inherent risk is the raw level of risk present in a situation before any preventive or mitigating controls are implemented.
A school district experiences repeated small losses from minor student accidents. The BEST risk management response is likely:
Answer: Implement safety training and physical controls to reduce frequency
Repeated minor losses indicate a systematic issue best addressed by mitigation controls that reduce the frequency and severity of incidents.
In enterprise risk management (ERM), 'risk appetite' refers to:
Answer: The amount of risk an organization is willing to accept in pursuit of its objectives
Risk appetite defines the level and type of risk an organization is prepared to accept while striving to achieve its strategic goals.
Which of the following scenarios represents a 'pure risk'?
Answer: The possibility that a school bus may be involved in an accident
Pure risks involve only the possibility of loss or no loss—there is no upside outcome—unlike speculative risks which have a potential gain.
Which method of risk financing involves an organization setting aside funds internally to cover anticipated losses?
Answer: Risk retention through self-insurance
Self-insurance is a form of risk retention where the organization builds an internal reserve fund to pay for expected losses rather than purchasing external insurance.