SPP Risk Management & Strategic Risk 2

Question 1

What does PESTLE analysis assess in the context of strategic risk identification?

Accepted Answer

Political, Economic, Social, Technological, Legal, and Environmental macro-environmental risks

Answer

Internal organizational strengths and process weaknesses

Answer

Customer satisfaction and brand loyalty risks

Answer

Supply chain efficiency and process bottleneck risks

Question 2

In quantitative risk analysis, what does Expected Monetary Value (EMV) calculate?

Accepted Answer

The average outcome of a decision weighted by the probability of each scenario

Answer

The total budget allocated for risk mitigation activities

Answer

The maximum possible financial loss from a single risk event

Answer

The cost of transferring risk to a third-party insurer

Question 3

Which analytical technique models thousands of scenarios with varying inputs to capture the compounding effects of multiple simultaneous risks?

Accepted Answer

Monte Carlo simulation

Answer

Siloed qualitative risk scoring

Answer

Simple sensitivity analysis

Answer

SWOT risk mapping

Question 4

What is a 'risk owner' in enterprise risk management?

Accepted Answer

An individual accountable for monitoring a specific risk and implementing its response

Answer

The CEO who bears ultimate legal responsibility for all organizational risks

Answer

An insurance company that has assumed a risk through a contractual policy

Answer

The board member who chairs the risk oversight committee

Question 5

What does 'residual risk' represent after risk mitigation efforts have been applied?

Accepted Answer

The risk level that remains after all mitigation and control actions have been implemented

Answer

The original inherent risk before any controls are applied

Answer

Risks that have been fully eliminated through avoidance strategies

Answer

New secondary risks inadvertently created by the mitigation strategy itself

Question 6

Which risk identification technique uses iterative rounds of anonymous expert consultation to systematically identify and prioritize risks?

Accepted Answer

Delphi technique

Answer

Root cause analysis

Answer

Sensitivity analysis

Answer

Fault tree analysis

Question 7

In strategic risk management, how is a 'black swan' event characterized?

Accepted Answer

A rare, nearly unpredictable event with extreme consequences that falls outside normal expectations

Answer

A risk with both high probability and high financial impact

Answer

A predictable risk that management consistently underestimates

Answer

A category of risk specific to the financial services and banking sector