Compliance and Auditing Risk Management

Question 1

In enterprise risk management, what does 'risk appetite' refer to?

Accepted Answer

The amount of risk an organization is willing to accept in pursuit of its objectives

Answer

Risk appetite is the total amount of risk that an organization is willing to accept in pursuit of its strategic objectives, as determined by leadership.

Question 2

The COSO ERM framework identifies how many components of enterprise risk management?

Accepted Answer

8

Answer

The original COSO ERM framework (2004) identified eight interrelated components: internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication, and monitoring.

Question 3

What is a risk heat map used for in compliance and risk management?

Accepted Answer

Visually plotting risks by likelihood and impact to prioritize responses

Answer

A risk heat map is a visual tool that plots identified risks on a matrix of likelihood versus impact to help prioritize risk responses and communicate risk levels to stakeholders.

Question 4

Which risk response strategy involves transferring risk to a third party such as an insurer?

Accepted Answer

Risk transfer

Answer

Risk transfer shifts the financial consequences of a risk to a third party, such as purchasing insurance or using contractual agreements to transfer liability.

Question 5

What is 'residual risk' in risk management?

Accepted Answer

The risk remaining after controls and mitigation measures have been applied

Answer

Residual risk is the level of risk that remains after an organization has implemented its risk responses and internal controls to address the inherent risk.

Compliance and Auditing Practice Test

Compliance and Auditing Practice Test

Compliance and Auditing Risk Management