RIMS Client Advisory & Consultation 3

Question 1

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?

Accepted Answer

COSO ERM Framework

Answer

The COSO ERM Framework (updated 2017) is the most widely referenced standard for designing and assessing enterprise risk management programs across industries.

Question 2

During a risk consultation, a client discloses information suggesting potential fraud within their own organization. What is the risk advisor's primary obligation?

Accepted Answer

Advise the client to disclose the matter to appropriate internal governance and legal counsel

Answer

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.

Question 3

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?

Accepted Answer

A detailed financial model projecting revenues, expenses, and recovery timelines

Answer

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.

Question 4

Which type of risk advisory engagement focuses on identifying gaps between a client's current insurance program and their actual risk exposures?

Accepted Answer

Coverage gap analysis

Answer

A coverage gap analysis systematically compares what a client's policies actually cover against their identified risk exposures to highlight uninsured or underinsured areas.

Question 5

A client is evaluating a captive insurance arrangement. Which factor MOST strongly indicates a captive may be appropriate for their organization?

Accepted Answer

The client has a large, predictable loss portfolio and sufficient capital to fund retained losses

Answer

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.

(RIMS) Risk and Insurance Management Society Certification Practice Test

(RIMS) Risk and Insurance Management Society Certification Practice Test

RIMS Client Advisory & Consultation 3