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

PESTLE analysis systematically evaluates six categories of macro-environmental factors that represent external strategic risks facing the organization.

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

EMV multiplies the monetary value of each possible outcome by its probability and sums the results to produce the expected financial value of a risk or decision.

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

Monte Carlo simulation uses repeated random sampling across thousands of scenarios to model how combined uncertainties and risk interdependencies affect strategic outcomes.

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

A risk owner is the designated individual responsible for monitoring a specific identified risk, implementing mitigation measures, and reporting on its status.

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

Residual risk is the level of exposure that persists after controls and mitigation strategies have been implemented, representing what must still be accepted or further addressed.

(SPP) Strategic Planning Professional Practice Test

(SPP) Strategic Planning Professional Practice Test

SPP Risk Management & Strategic Risk 2