Risk Identification & Evaluation Flashcards
7 cards from real RIMS 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 Identification & Evaluation flashcards as text
When conducting a business impact analysis (BIA), the primary objective is to:
Answer: Identify critical business functions and quantify the impact of their disruption
A BIA identifies which business processes are most critical and estimates the financial and operational consequences of their interruption.
Which risk identification method involves tracing an accident backward from its outcome to identify all contributing causes?
Answer: Fault tree analysis
Fault tree analysis starts with an undesired event and works backward using logic gates to identify all possible causes and contributing factors.
A risk manager uses the '5 Whys' technique. This is primarily used to:
Answer: Drill down to the root cause of a problem by repeatedly asking why
The 5 Whys technique iteratively asks 'why' to move beyond symptoms and uncover the underlying root cause of a problem.
In the context of RIMS risk maturity, an organization that has formalized risk processes but they operate in silos by department is at which level?
Answer: Repeatable
The 'Repeatable' maturity level indicates documented and repeatable processes exist but are not yet integrated across the enterprise.
Which type of risk involves the potential for loss arising from failed internal processes, people, systems, or external events?
Answer: Operational risk
Operational risk, as defined by Basel II/III and widely adopted in ERM, encompasses losses from internal failures and external events.
A risk manager calculates that a single storm could cause $5M in losses with a 2% annual probability. The annual expected loss is:
Answer: $100,000
Expected loss = probability × severity = 0.02 × $5,000,000 = $100,000 per year.
An organization's risk appetite statement should primarily reflect:
Answer: The amount and type of risk the organization is willing to accept in pursuit of its objectives
Risk appetite expresses the board-level decision about how much risk is acceptable in pursuit of strategic goals, balancing opportunity against exposure.