CRMA - Certification in Risk Management Assurance Risk Management Frameworks Questions and Answers

Question 1

An organization is in the process of selecting a risk management framework. Management wants a framework that is globally recognized, flexible, and provides high-level principles and guidelines rather than prescriptive requirements. Which of the following frameworks would be most suitable for this organization?

Accepted Answer

ISO 31000

Answer

ISO 31000 is an international standard that provides principles and generic guidelines on risk management. It is not specific to any industry or sector and is designed to be customized to any organization and its context. COBIT is a framework for IT governance and management, SOX is a US federal law focused on financial reporting and internal controls, and the COSO Internal Control framework focuses specifically on internal controls.

Question 2

A CRMA is reviewing their organization's risk management framework, which is based on the COSO Enterprise Risk Management (ERM) Framework. The CRMA wants to ensure all key components are being addressed. Which of the following is one of the five interrelated components of the 2017 COSO ERM Framework?

Accepted Answer

Strategy & Objective-Setting

Answer

The 2017 COSO ERM Framework, 'Enterprise Risk Management—Integrating with Strategy and Performance,' is organized around five interrelated components: 1) Governance and Culture, 2) Strategy and Objective-Setting, 3) Performance, 4) Review and Revision, and 5) Information, Communication, and Reporting. While Risk Identification, Risk Assessment, and Control Activities are crucial concepts in risk management, they are integrated within these five overarching components in the updated framework.

Question 3

Which principle of risk management, according to ISO 31000, emphasizes that risk management should be an inseparable part of all organizational activities, including strategic planning and decision-making?

Accepted Answer

Integrated

Answer

The 'Integrated' principle of ISO 31000 states that risk management is not a stand-alone activity but should be an integral part of all organizational processes and decision-making at all levels. This ensures that risk is considered when setting objectives and making strategic choices.

Question 4

A manufacturing company has recently implemented a risk management framework. To provide assurance, the internal audit activity is asked to evaluate its effectiveness. The audit reveals that while a comprehensive risk register exists, the framework is not tailored to the company's specific operational context and strategic objectives. This weakness primarily violates which core principle of ISO 31000?

Accepted Answer

Customized

Answer

The 'Customized' principle of ISO 31000 states that the risk management framework and process should be tailored to the organization's external and internal context and objectives. A generic, non-tailored framework fails to address the unique risks and opportunities the organization faces, limiting its effectiveness.

Question 5

When comparing the COSO ERM framework with ISO 31000, a key distinction is that COSO ERM:

Accepted Answer

Places a stronger emphasis on internal controls, governance, and compliance.

Answer

While both frameworks aim to improve risk management, COSO ERM is generally considered more detailed and places a stronger emphasis on the link between risk management, internal control, governance, and compliance. This is partly due to its origins with sponsoring organizations focused on accounting and auditing. ISO 31000 is more of a high-level, flexible guide. Neither framework is certifiable for organizations.

(CRMA) Certification in Risk Management Assurance Practice Test

(CRMA) Certification in Risk Management Assurance Practice Test

CRMA - Certification in Risk Management Assurance Risk Management Frameworks Questions and Answers