Presentations Risk Assessment & Management 5

Question 1

A presenter explains that a risk has been 'accepted' rather than mitigated. Under which condition is risk acceptance MOST appropriate?

Accepted Answer

When the cost of mitigation exceeds the expected value of the loss

Answer

Risk acceptance is appropriate when the cost of mitigating a risk is greater than the potential financial impact of the risk itself.

Question 2

During a risk presentation, a team leader introduces the concept of 'secondary risks.' What are secondary risks?

Accepted Answer

New risks that arise as a direct result of implementing a risk response

Answer

Secondary risks are unintended new risks that emerge specifically because a risk response action was taken.

Question 3

A risk analyst presenting to a board uses a 'tornado diagram.' What type of information does a tornado diagram convey in risk analysis?

Accepted Answer

Which input variables have the greatest impact on a model's output

Answer

A tornado diagram ranks input variables by their sensitivity impact on an outcome, with the widest bars representing the highest influence.

Question 4

In a project risk presentation, 'risk escalation' refers to which of the following?

Accepted Answer

Elevating a risk to a higher management level because it exceeds the team's authority to handle

Answer

Risk escalation occurs when a risk is beyond the current team's authority or capacity to manage and must be referred to higher-level decision-makers.

Question 5

A risk presenter highlights 'correlation risk' in a portfolio context. What does correlation risk describe?

Accepted Answer

The danger that multiple risks materialize simultaneously because they share common causes

Answer

Correlation risk is the danger that assets or risks assumed to be independent move together during a crisis, amplifying overall losses.

Presentations Practice Test