RCMS Risk Assessment & Internal Controls 3

Question 1

Segregation of duties is LEAST effective when which condition exists?

Accepted Answer

Multiple employees share access to the same system

Answer

Shared system access alone does not eliminate segregation of duties; the critical failure is when one person controls conflicting functions such as authorization and recording.

Question 2

A financial institution uses stress testing to model the impact of a sudden 300 basis point interest rate spike. This activity primarily supports which risk management objective?

Accepted Answer

Scenario-based risk quantification

Answer

Stress testing applies hypothetical adverse scenarios to quantify potential losses, which is a form of scenario-based risk quantification.

Question 3

Which internal control principle requires that audit trails and transaction records be preserved and accessible for review?

Accepted Answer

Documentation and record retention

Answer

Documentation and record retention ensures that all transactions are recorded and evidence is available for subsequent review or audit.

Question 4

A compliance team rates a vendor relationship as high-risk due to geographic location in a high-corruption jurisdiction. This rating is an output of which process?

Accepted Answer

Third-party due diligence screening

Answer

Third-party due diligence screening evaluates external parties based on factors including jurisdiction, ownership, and corruption indices to assign risk ratings.

Question 5

Which statement BEST describes a Key Risk Indicator (KRI)?

Accepted Answer

A forward-looking metric that signals increasing risk exposure before a loss occurs

Answer

KRIs are leading indicators designed to provide early warning of rising risk levels, allowing management to act before incidents occur.

(RCMS) Registered Compliance Management Specialist Certification Practice Test

(RCMS) Registered Compliance Management Specialist Certification Practice Test

RCMS Risk Assessment & Internal Controls 3