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CPP Cert Study Flash Cards > Business Principles (13%) > Flashcards

Business Principles (13%) Flashcards

1
Q

What tailors operations to support the organizational strategy?

A

Management principles

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2
Q

Who must understand business principles in order to serve their organizations effectively?

A

Security Managers

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3
Q

What is the initial step in defining organizational structure?

A

Identifying essential business units needed to meet the strategy

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4
Q

3 Ways that management practices are largely expressed

A
  1. HR management
  2. Knowledge management
  3. Business structure
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5
Q

A specific description of where the business will be in the long-term

A general understanding of the business, its culture, & its future goals

A

Vision

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6
Q

A concrete specification of products or services, level of quality & other tangible aspects of the business

A communication of business functionality & operational methods

A

Mission

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7
Q

Objectives of Organizational Strategy

A

Specific goals the organization wants units to achieve in sales, market share, product differentiation & other relevant metrics

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8
Q

S.M.A.R.T

A

Specific Measurable Attainable Relevant Time-bound

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9
Q

Organizational Strategy

A
  1. Defines why the business exists
  2. Defines how the business will be profitable/viable
  3. Requires long-term view (3-5 years)
  4. Determined by business unit’s top leadership
  5. Does not focus on day-to-day operations
  6. Provides general direction
  7. Is the fundamental template for direction
  8. Defines & supports long-term goals
  9. Serves as the foundation for developing business processes that support the overall business structure required to meet the organizational strategy
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10
Q

4 Important themes in Organizational Management

A
  1. Lines of authority responsibility & communications should be clear & direct
  2. Responsibility should come with appropriate authority
  3. Organizational structure should consider the inter-relationships among functions, roles, and responsibilities
  4. Communication channels should be structured to allow effective mission accomplishment and interaction
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11
Q

5 Components of Managing

A

Planning

Organizing

Directing

Coordinating

Controlling

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12
Q

Business principles most important issues

A

HR requirements knowledge, management, corporate structure

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13
Q

What 4 business fundamentals need to be incorporated into security management practices?

A
  1. ROI strategies
  2. Metrics management
  3. Data capture & analysis
  4. Cost-benefit analysis
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14
Q

Why is knowledge of finance critical to security management?

A

Because many business decisions are based on financial outcomes

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15
Q

Which department generates revenue?

A

Profit Center

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16
Q

If a function doesn’t result in more revenue than is possible without it, that function should be reduced or eliminated

A
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17
Q

When should ‘generated income’ be budgeted?

A

In the same fiscal period as the costs necessary to produce it

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18
Q

A budget allocates money & provides a variance warning mechanism & fiscal uniform

A

Budgets are usually drawn up on a yearly or other periodic basis

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19
Q

What is the process where only funds for justified expenditures are provided?

A

Zero-based budgeting

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20
Q

What is the budget development process viewed as?

A
  1. Top-down
  2. Bottom-up

* The best approach is a combination of the 2

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21
Q

Top-down

A

Performance goals are imposed on lower management, often without their input

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22
Q

Bottom-up

A

Frontline managers set budgets based on their knowledge of operations

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23
Q

Management’s financial approach to determining expected ROI & managing relevant risks

A

Financial Strategy

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24
Q

The first step in establishing a financial strategy?

A

Identifying expected margins

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25
Q

What must an organization do in order to monitor execution & prevent fraud?

A

Implement a financial strategy & oversee with appropriate controls

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26
Q

GAAP

A

Generally Accepted Accounting Principles

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27
Q

What standard do many countries use and is established & maintained by the International Accounting Standards Board?

A

International Financial Reporting Standards (IFRS)

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28
Q

2 Things that financial decisions are based on

A
  1. Past performance
  2. Projected future performance
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29
Q

The basis of financial management is?

A

Understanding the accounting principles used in financial reports

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30
Q

3 Standard financial reports

A
  1. Income statement
  2. Balance sheet
  3. Statement of cash flows
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31
Q

Which financial report reflects revenue, expenses, & the difference between them (net income)?

A

Income statement Also indicates profitability but not overall financial health - the balance sheet aids in that assessment

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32
Q

Categories of Expenses

A
  1. Cost of goods sold
  2. Sales & marketing
  3. Administration (operating) costs
  4. Interest
  5. Taxes
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33
Q

EBITDA

A

Earnings Before Interest Taxes Depreciation Amortization

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34
Q

Summarizes an organization’s investing and financing and provides insight into the asset & liability mix & how it relates to shareholder equity

A

Balance Sheet

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35
Q

Liabilities (L) + Shareholder Equity (SE) =

A

Assets

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36
Q

Anything a company owns or has title to that may provide a future economic benefit

A

Assets

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37
Q

An organization’s financial commitments

A

Liabilities

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38
Q

Amount of ownership allocated to shareholders derived from retained earnings, net income, & dividend payout

A

Shareholder Equity

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39
Q

The amount of net income reinvested in an organization

A

Retained Earnings

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40
Q

Provides insight into how cash inflows and outflows affect an organization

A

Cashflow Statement

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41
Q

Amount of cash generated/consumed by operations based on net income and changes in liabilities

A

Net Operating Cash Flow

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42
Q

Amount of cash generated/consumed by investing or selling/acquiring buildings or property

A

Net Investing Cash Flows

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43
Q

Cash generated from financing

A

Financial Cash Flow

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44
Q

Amounts the organization owes

A

Accounts Payable

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45
Q

Amount of interest payable on loans

A

I

Interest Payable

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46
Q

Amounts owed for leases

A

Leases

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47
Q

Amounts of principal paid

A

Current Long-term Debt

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48
Q

Amounts owed on a loan or equity financing

A

Long-term Debt

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49
Q

Assets & liabilities that can be converted quickly

A

Current Accounts

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50
Q

Analysis of profit margins, returns, and earnings

A

Profitability Ratio

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51
Q

Revenue (R) - Cost of goods sold (CGS) - general & Admin costs (GAC) / Revenue (R) =

A

Gross Profit Margin

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52
Q

Measures profit-based strictly on sales & east of goods sold; provides insight into the efficiency of manufacturing a product

A

Gross Profit Margin

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53
Q

EBITDA / Revenue =

A

Operating Margin

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54
Q

Demonstrates the company’s overall operating efficiency in producing & selling a product

A

Operating Margin

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55
Q

Net income / Revenue =

A

Net Profit Margin

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56
Q

Measures net profit after all expenses included

A

Net Profit Margin

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57
Q

Net income / total assets =

A

Return on Assets (ROA)

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58
Q

Demonstrates the organization’s ability to generate income based on its assets, independent of any financing it measures how well a company makes a profit on assets it already owns

A

Return on Assets (ROA)

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59
Q

Net income / Shareholder equity =

A

Return on Investment (ROI)

60
Q

Indicates how well a company uses financial assets to generate income: measures a company’s effectiveness of using loans to generate a profit

A

Return on Investment (ROI)

61
Q

Net income / Total shares =

A

Earnings Per Share (EPS)

62
Q

Represents how much income (or less) is generated per share of the organization

A

Earnings Per Share (EPS)

63
Q

P/E / EPS =

A

Price to Earnings

64
Q

Relates a company’s share price to its EPS & is useful in determining whether an organization is fairly valued. It can also be used to value private shares if an investor is thinking of purchasing an interest in a private organization

A

Price to Earnings

65
Q

The general benchwork for publicly traded P/E values is around

A

17

66
Q

Borrowing capital to purchase assets that can increase revenue

A

Leveraging

67
Q

Focus on the ability to cover expenses & operating costs in the near and long-term

A

Risk Ratios

68
Q

Examines the company’s ability to cover short-term obligations

A

Current Ratio

If the current ratio is greater than 1 the company has the ability to cover all its current liabilities with its current assets

69
Q

(Cash + securities + A/R) / current liabilities =

A

Quick Ratio

70
Q

Measures the ability to cover current liabilities with current assets, also known as the acid test

A

Quick Ratio

Provides a more accurate picture of an organization’s ability to cover bills for the current reporting period

71
Q

Total liabilities / shareholder equity =

A

Debt-to-equity Ratio

72
Q

Provides a long-term perspective in understanding a company’s financial health by analyzing how a company funds its growth & operations

A

Debt-to-equity Ratio

Ratios above 1 demonstrate a company is highly leveraged and is financing itself with outside loans & funding

73
Q

Robust growth or recession

A

Macroeconomic Environment

74
Q

(AL + R) / CSP = AL - Avoided loss R - Recoveries made CSP - Loss of security program including personnel administrative & capital

A

ROI

75
Q

A standard profitability ratio that measures how much net income is earned for each dollar invested

A

ROI Also called Return on Equity (ROE)

76
Q

Employers create an atmosphere that fosters honesty or dishonesty by the way they conduct business

A

Business principles & executive behavior are more influential on ethical behavior than individual conscience

77
Q

5 things that employee ethics are most often determined by

A
  1. Organizational climate
  2. Role of “significant others” such as executives superiors & peers
  3. Availability of resources
  4. Corporate culture regarding social linkage & corporate governance
  5. Intellectual underpinnings of the business system
78
Q

Instilling a reaffirming ethics as a core organizational value is a process, not a one-time event

A
79
Q

An ethics program provides the guidance & structure for compliance

A

The code of ethics program may be separate or combined

80
Q

Three questions comprise the test for ethical conduct

A
  1. Is it legal?
  2. Is it balanced?
  3. How will it make me feel about myself?
81
Q

Explains or describes ethical events

A

Descriptive ethics

82
Q

Examines ethical concepts to achieve a deeper understanding of meaning and justification

A

Analytical Ethics

83
Q

Most relevant to business actively applies ethical concepts in specific situations

A

Applied Ethics

84
Q

What the 5 core foundational values of business ethics

A
  1. Respect
  2. Honesty
  3. Fairness
  4. Compassion
  5. Responsibility
85
Q

Makes specific judgments about right & wrong and prescribed behaviors as ethical in the context of the activity Makes claims about what should be done, and what may not be done

A

Applied Ethics

86
Q

On what 3 levels are business ethics applied?

A
  1. Individual employee
  2. The organization
  3. Society
87
Q

3 key reasons business people make unethical choices?

A
  1. Convenience
  2. Winning
  3. Relativism
88
Q

What are two aspects of ethics?

A
  1. Ability to discern right from wrong Commitment to do what is right, good & proper
  2. A statement of values (aka mission statement) is the cornerstone of the ethics program

* A statement of values (aka mission statement) is the cornerstone of the ethics program

89
Q

The original ASIS code of ethics was focused on security practitioners dedicated to the national defense

A

Later broadened to include detailed examples of the behaviors that constitute ethical conduct

Currently combines a statement of ethics with a code of conduct and is “normative” (stating what is expected)

90
Q

Staffing

A

Internal recommendations are the best way to recruit

91
Q

What should the interviewer examine during the interviewing process

A
  1. Candidate’s objective capabilities
  2. Candidate’s subjective fit with the team (sometimes more important)
92
Q

Who is the job requirements analysis made by

A

the hiring manager and by other team members & organizational leaders

93
Q

What does a job requirement’s analysis produce?

A

Requirements narrow enough to be accurate but broad enough to include many good candidates

* Staffing decisions are measured against a detailed job requirements analysis

94
Q

What 2 things does a job requirements analysis address?

A
  1. Direct requirements the candidate must meet to function in the position
  2. Indirect requirements which are less specific
95
Q

Direct requirements the candidate must meet to function in the position

A
  1. Certifications
  2. Education level
  3. Years of experience
  4. Previous job responsibilities
  5. Knowledge of computer applications
96
Q

Indirect requirements which are less specific

A
  1. Leadership ability
  2. Ability to multi-task
  3. Organizational skills
  4. Communication skills
97
Q

What are 4 sets of mental preferences?

A
  1. “sensing” or “intuition” perception
  2. Thinking” or “feeling” judgment
  3. “Extroversion” or “introversion”
  4. “sensing” or “intuition” life management orientation
98
Q

What does not provide certain answers - just possible strengths & weaknesses?

A

Personality Inventory

99
Q

Big 5 Model of Personality

A
  1. Surgency
  2. Agreeableness
  3. Adjustment
  4. Conscientiousness
  5. Openness to experience
100
Q

What type of personality better adapts to monotonous tasks?

A

Introverted personality

101
Q

3 Criteria for a performance appraisal

A
  1. Task performance
  2. Overall behavior on the job
  3. Positive & negative traits that relate to the officer’s performance
102
Q

Minimum frequency for performance appraisals?

A
  1. Formal performance appraisals - annual
  2. Informal performance appraisals - biannual
103
Q

Behavioral science is important in assets protection for three key reasons

A
  1. Many security risks are the result of human threats & behavioral science can yield insights into human threat sources
  2. Security management requires effective interaction with other people especially in communication skills
  3. An effective security manager must have the trust of staff & the ability to delegate to them the responsibility & authority to act within their functional area
104
Q

Peter Drucker

A

Management should be guided by 2 principles

  1. Who’s the customer
  2. Quality: conformance to customer requirements
105
Q

Douglas McGregor

A

Theory X: workers are lazy, lack creative ambition, must be goaded, require constant supervision, are only motivated by fear personified in the hard-driving authoritarian manager

106
Q

Douglas McGregor

A

Theory Y: Workers are naturally motivated, want to work hard, are thoughtful, eager to perform well, are willing to be guided & taught

107
Q

Theory Y

A

Workers are capable of assuming greater response & seek it in the proper work environment

Workers are able to exercise self-direction motivation, ingenuity & creativity

Represents involvement contribution & commitment by all workers

108
Q

Theory Y

A

Programs based on Theory Y are more successful than those based on Theory X

109
Q

Chris Argyris’ Behavioral Theory

A
  1. Traditional organizational principles structures & procedures are incompatible with the mental health of employees
  2. Task specialization, the chain of command, unity of direction, tight budgets & controls are calculated to make subordinate passive & submissive with the direction of their own work
  3. Workers became apathetic, they engage in defense mechanisms, or just fight the system
110
Q

Fredrick Herzberg

A

Motivation-Hygiene Theory: two-dimensional model involving hygiene (maintenance factors) & satisfiers (motivators)

111
Q

Abraham Maslow

A

Hierarchy of Needs: behavior is driven by basic needs at different levels

112
Q

Warren Bennis

A

Behavioral Theory: Attempts to avoid human relations vs. scientific management & employee satisfaction vs. organizational requirements

113
Q

Code of Hammurabi

A
  1. 6th King of the Amorite Dynasty of Old Baylon
  2. Best known for its retributive provisions “eye for an eye”
  3. Regulated commerce & required craftsmen to teach their skills to a younger person
  4. This system of apprenticeships ensured that adequate numbers of craftsmen were maintained
114
Q

Education + Training + Guided Experience =

A

Development

115
Q

Private police in the US: findings & recommendations for the US Department of Justice, 1972

A
  1. “Rand Report”
  2. Contended security officers, were uneducated, poorly paid, aging males
  3. Based on a very small research sample
116
Q

Private Security & Police in America 1985

A
  1. “Hallcrest Report 1”
  2. Found inadequate employee selection & training standards
117
Q

The number or proportion of employees exposed to training?

A

Learning Contact

118
Q

Designing & developing a security training program is a 3-pronged group effort

A
  1. Protection managers must guide & initiate the process & play a role in instruction
  2. One or more staff members should be developed as designated training directors, coordinator or officers
  3. Some external resource will almost certainly be needed
119
Q

What is the acquisition of the knowledge, skills & abilities directly related to job performance

A

Training

120
Q

What is the foundation of training?

A

Education

121
Q

What must be guided or directed by education & training

A

Experience

122
Q

The determination of how a company trains its security department is based on how it views the protection of:

A
  1. It’s people
  2. It’s property
  3. It’s information assets
123
Q

What is essential to a professional protection force concerned with terrorism, espionage, workplace safety, and maintaining positive relations with the various publics that an organization deals with including customers, employees, vendors, police, emergency medical personnel, HAZMAT teams, etc…

A

Affective Learning

124
Q

What is often caused by both training & supervisory breakdowns?

A

Performance Deficiencies

125
Q

Mandatory training should be avoided

A
  1. Contradicts Malcolm Knowles’ “principles of andragogy” Adults are self-directed & will take responsibility for their own learning needs
  2. Undermines credibility of the entire training program in eyes of the recipient
  3. Management may lose credibility
  4. Training requirements as minimum standards do not ensure professional competence
126
Q

Frog Syndrome

A

Managers decide to train all subordinates personally, jump into it & then when workload hits home, jump back out, leaving it uncompleted

127
Q

Management’s failure to train security officers can result in complaints from labor unions of plaintiffs in a legal claim of negligence

A
  1. Training should be documented
  2. Rosters of attendees & class activities should be kept
  3. Tests should be signed by instructors & employees
  4. Centralized databases should be maintained
  5. OJT checklists & employee elevation should document training given
128
Q

An instructor purports to be certified on a topic but has no background to teach a class

A

Certified Trainer Syndrome

129
Q

3 Learning Domains

A
  1. Cognitive (knowledge-based)
  2. Affective (attitudinal or perceptual)
  3. Psychomotor (physical skills)
130
Q

HR Training Methods

A
  1. Lectures
  2. Case study
  3. Job Aids
  4. Mentors
  5. In the security environment, mentoring works best
131
Q

A formal undertaking between two parties - the insurer & the insured - under which the insurer agrees to indemnify or compensate the insured for specified losses from specified reasons

A

Insurance

132
Q

Insurance is no replacement for security

A

Compared to insurance, protection techniques like risk reduction & risk spreading are preferable for several reasons

133
Q

Insurance is often divided into two general categories

A
  1. Property: Covers damage & loss of physical assets
  2. Liability: Covers employee risks, losses affecting the public, etc…
134
Q

The cause of a possible loss

A

Perils.

135
Q

Exclusions

A
  1. Provisions that suspend coverage under certain conditions
  2. Vacancy clause: suspends coverage while a property stands vacant beyond a specified period
  3. In fidelity coverage, it is customary to exclude any person the insured knows to have committed any fraud or dishonest act in the insured’s service or otherwise
136
Q

A frequent technique to extend coverage to another is to have the other designated as a named insured int he policy

A
  1. named insureds: however, are subject to the same policy conditions as the original insured
  2. In some cases, this may not achieve the security objective of the additional named insured
137
Q

Indemnification & Liability Insurance

A

It is possible to eliminate exclusions by adding endorsements - sometimes called “riders”

138
Q

Generally, losses may be classified as:

A
  1. Direct loss, such as the physical loss of or damage to the object concerned
  2. Loss of use, such as reduction of net income, due to loss of use of the damaged or destroyed object
  3. Extra - expense losses, such as the costs of defending a liability suit & paying a judgment
139
Q

A loss that occurred during the period of the policy would be covered, no matter when the occurrence was discovered, even after the policy expired

A

Occurrence Loss

140
Q

Tail cover:

A

Retrospective coverage of events that occurred during a prior policy period but are raised during the tail period

141
Q

Surety Bonds

A

Guarantee the credit or performance of a contract

142
Q

Fidelity Bonds

A

Protect against employee dishonesty

143
Q

EPLI

Employees Practices Liability Insurance

A

EPLI covers defense costs, judgments, and settlements but may not cover punitive damages, fines or penalties

144
Q

Smaller firms and organizations may form risk retention groups (RRG)

A

Risk Retention Groups - overall, the RRG is a viable alternative to high premiums & the difficulty of obtaining special coverage

145
Q

May be based on either the tort theory of negligence or the contract theory of breach of warranty

A

Product Liability

Since it’s easier to prove breach of warranty, most claims are based on a breach of an express warranty or an implied warranty

146
Q

Business interruption & extra expense endorsements cover what?

A

Other expenses incurred to keep a product on the market regardless of cost or for a bank to function regardless of expense

CPP Cert Study Flash Cards (8 decks)

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