Client Advisory & Consultation 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 Client Advisory & Consultation flashcards as text
A client in the manufacturing sector wants to implement an enterprise risk management (ERM) framework. Which standard is MOST widely referenced for structuring an ERM program?
Answer: COSO ERM Framework
The COSO ERM Framework (updated 2017) is the most widely referenced standard for designing and assessing enterprise risk management programs across industries.
During a risk consultation, a client discloses information suggesting potential fraud within their own organization. What is the risk advisor's primary obligation?
Answer: Advise the client to disclose the matter to appropriate internal governance and legal counsel
The advisor's primary obligation is to direct the client to appropriate internal governance channels (audit committee, legal counsel) so the matter is handled through proper procedures while respecting professional boundaries.
A client asks for help designing a business interruption (BI) insurance program. What is the MOST important input needed to set an adequate BI limit?
Answer: A detailed financial model projecting revenues, expenses, and recovery timelines
BI limits must be based on a financial model that captures projected revenue loss, continuing fixed expenses, and the maximum estimated period of restoration to determine the correct indemnity period and limit.
Which type of risk advisory engagement focuses on identifying gaps between a client's current insurance program and their actual risk exposures?
Answer: Coverage gap analysis
A coverage gap analysis systematically compares what a client's policies actually cover against their identified risk exposures to highlight uninsured or underinsured areas.
A client is evaluating a captive insurance arrangement. Which factor MOST strongly indicates a captive may be appropriate for their organization?
Answer: The client has a large, predictable loss portfolio and sufficient capital to fund retained losses
Captives are most appropriate when an organization has sufficient scale, predictable losses, and capital reserves to fund retained risks, enabling it to capture underwriting profit rather than paying it to commercial insurers.
A risk advisor is conducting a stakeholder interview as part of a risk assessment. What is the PRIMARY purpose of these interviews?
Answer: To gather qualitative insights on emerging risks and risk culture that quantitative data may not capture
Stakeholder interviews surface qualitative intelligence—risk culture, emerging concerns, and operational nuances—that historical loss data and quantitative models often cannot reveal.
When advising a client on parametric insurance, what is the defining characteristic that distinguishes it from traditional indemnity coverage?
Answer: Payouts are triggered by a predefined index or parameter (e.g., wind speed, earthquake magnitude) regardless of actual loss
Parametric insurance pays a predetermined amount when a specified trigger (such as wind speed or rainfall level) is met, eliminating the need for individual loss adjustment and providing faster payouts.