SPP Risk Management & Strategic Risk

Question 1

What is the primary purpose of enterprise risk management (ERM) in strategic planning?

Accepted Answer

To align risk appetite with strategy and manage risks holistically across the organization

Answer

To eliminate all organizational risks before strategy execution

Answer

To transfer financial risks to insurance companies

Answer

To create detailed incident response plans for operational teams

Question 2

Which framework is most widely recognized as the global standard for enterprise risk management?

Accepted Answer

COSO ERM Framework

Answer

Balanced Scorecard

Answer

Six Sigma DMAIC

Answer

Porter's Value Chain

Question 3

What does 'risk appetite' mean in the context of strategic planning?

Accepted Answer

The amount of risk an organization is willing to accept in pursuit of its strategic objectives

Answer

The maximum financial loss an organization can sustain before insolvency

Answer

The total number of risks catalogued in an organization's risk register

Answer

The probability that a risk event will occur within a given planning period

Question 4

In a standard risk probability-impact matrix, which risk category demands immediate strategic attention?

Accepted Answer

High likelihood, high impact

Answer

Low likelihood, low impact

Answer

High likelihood, low impact

Answer

Low likelihood, high impact

Question 5

How is 'strategic risk' distinguished from operational risk?

Accepted Answer

Strategic risks threaten the organization's ability to achieve its long-term goals and execute its strategy

Answer

Strategic risks arise from day-to-day business operations and process failures

Answer

Strategic risks are limited to financial market volatility

Answer

Strategic risks only encompass compliance and regulatory exposure

Question 6

Which risk response strategy involves accepting a risk without taking mitigation action because the cost of mitigation exceeds the potential loss?

Accepted Answer

Risk acceptance

Answer

Risk avoidance

Answer

Risk transfer

Answer

Risk reduction

Question 7

What is the primary function of a risk register in strategic planning?

Accepted Answer

A centralized document that records identified risks, assessments, owners, and planned responses

Answer

A financial reserve set aside to cover potential losses from risk events

Answer

The legally required register of risks disclosed to shareholders in annual reports

Answer

A software platform that automates quantitative risk calculations