STEP Risk Assessment & Mitigation

Question 1

What is the first step in the risk management process?

Accepted Answer

Identify potential risks through systematic analysis

Answer

Purchase insurance for all possible risks

Answer

Ignore risks until they become problems

Answer

Transfer all risks to third parties

Question 2

How should risks be prioritized?

Accepted Answer

Based on probability of occurrence and potential impact

Answer

Alphabetically by risk name

Answer

By the order in which they were identified

Answer

All risks should receive equal attention

Question 3

What is risk mitigation?

Accepted Answer

Taking actions to reduce the likelihood or impact of identified risks

Answer

Eliminating all risks completely

Answer

Ignoring risks with low probability

Answer

Transferring all responsibility to insurers

Question 4

When should a risk register be updated?

Accepted Answer

Continuously as new risks emerge and existing risks change

Answer

Only during annual reviews

Answer

When a risk event actually occurs

Answer

Only when auditors request it

Question 5

What is residual risk?

Accepted Answer

The risk remaining after mitigation measures have been applied

Answer

The original risk before any action

Answer

Risk that has been completely eliminated

Answer

Risk that only affects other organizations

Question 6

How does risk appetite influence management decisions?

Accepted Answer

It defines the level of risk an organization is willing to accept in pursuit of objectives

Answer

It eliminates the need for risk assessment

Answer

It only applies to financial risks

Answer

It is determined solely by regulators