Quiz 1

Question 1

An approach to risk management when risk assessment is being undertaken by the Board of Directors, the Chief Executive Officers (CEO) and the other top-level management of an organization

Answer 1

Top-down Risk Assessment

Question 1

An approach to risk management when risk assessment are undertaken by involving individual members of staff and local department management

Answer 1

Bottom-up Risk Assessment

Question 2

Risk Assessment Technique where the use of structured questionnaires and checklists to collect information that will assist with the recognition of the significant risks

Answer 2

Questionnaires and Checklists

Question 3

Risk Assessment Technique where collection and sharing of ideas at workshops to discuss the events that could impact the objectives, core processes or key dependencies

Answer 3

Workshops and Brainstorming

Question 4

Risk Assessment Technique where physical inspections of premises and activities and audits of compliance with established systems and procedures

Answer 4

Inspections and Audits

Question 5

Risk Assessment Technique where Analysis of the processes and operations within the organization to identify critical components that are key to success

Answer 5

Flowcharts and Dependency Analysis

Question 6

A most commonly used risk assessment techniques where an analysis of the strengths, weaknesses, opportunities, and threats faced by the organization

Answer 6

SWOT Analysis

Question 7

Risk Assessment Technique where Considers the political, economic, social, technological, legal and ethical (or environmental) risks faced by the organization

Answer 7

PESTLE Analysis

Question 8

Risk Assessment Technique where a structured approach that ensures that no risks are omitted. It is often undertaken of hazardous chemical installations and complex transport installations and complex transport structures, such as railways and nuclear power

Answer 8

HAZOP (Hazard and Operability)

Question 9

Risk Assessment Technique where a very analytical and time-consuming approach just like HAZOP

Answer 9

FMEA (Failures Modes and Effect Analysis)

Question 10

Risk Assessment Technique where one of the most popular tools of analyzing risk

Answer 10

Bow-Tie Analysis

Question 11

It is the overall process of risk identification, risk analysis and risk evaluation

Answer 11

Risk Management Process

Question 12

It’s purpose is to find, recognize and describe risks that might help or prevent an organization in achiecing its objectives.

Answer 12

Risk Identification

Question 13

It’s purpose is to comprehend the nature of risk and its characteristics including, the level of risk

Answer 13

Risk Analysis

Question 14

It’s purpose is to support decisions where it involves comparing the results of the risk analysis with the established risk criteria to determine where additional action is required

Answer 14

Risk Evaluation

Question 15

According to ISO it is only useful if the conclusions of the assessment are used to inform decisions and/or to identify the appropriate risk responses for the type of risk under consideration

Answer 15

Risk Management Process

Question 16

When undertaking risk assessment, it is common to identify several risk that should impact the company’s objectives, there is a need to reduce the number of risks to a level that will be consedered priority level for management, or the risks that are most important to the achievement of the company’s objectives

Answer 16

Risk Significance

Question 17

• Is a simple visual presentation of the signifianct risks that have been recognized or identified
• The most commonly used ________ is the likelihood/impact matrix, on that demonstrates the relationship between the likelihood of the risk materializing and the impact of the event should the risk materialize

Answer 17

Risk Matrix

Question 18

It determines the nature and type of impact which could occur assuming that a particular event situation or circumstances has occured

Answer 18

Consequence Analysis

Question 19

Represents the long-term approach of the organization to risks or this is the established risk criteria

Answer 19

Risk Attitude

Question 20

Reflects the amount and type of risks that an organiztion is willing to pursue or retain or the more immediate need to take risk in order to achieve objectives

Answer 20

Risk appetite

Question 21

It includes all the risks that have already been identified, plus any emerging risks that are starting to appear

Answer 21

Universe of Risk

Question 22

is the level of risk that the organization fells comfortable taking and embedding into core processes because, regardless of the likelihood of the risk materializing, the impact is so small that it would not be significant if it did materialize or there will be a likelihood of a risk materializing that is considered so remote that it is assumed that it will not occur, even though it would be very serious if it did.

Answer 22

Comfort Zone

Question 23

Includes all of the risks that have high-likelihood and will be intolerable for the organization

Answer 23

Critical Zone

Question 24

Include all the risks with medium-likelihood/medium impact that will require some judgement before acceptance

Answer 24

Concerned zone and cautious zone

Question 25

It's purpose is to enable the organization to identify where similar risks exist within the organization

Answer 25

Risk Classification Systems

Question 26

Offers a classification system for the risk to the key dependencies in the organization.

Answer 26

Firm Risk Scorecard

Question 27

is the measure of how much risk the organization should take or can afford to take and this is compatible with the organization's attitude to risks

Answer 27

Risk capacity

Question 28

is the actual risk the organization is taking and this may not be the same as the risk appetite of the organization

Answer 28

Risk exposure

Question 29

Risk that changes in financial market prices and rates that will reduce the value of a security or a portfolio

Answer 29

Market risk

Question 30

risk that the value of a fixed-income security will fall as a result of an increase in market interest rates

Answer 30

Interest rate risk

Question 31

risk associated with volatility in stock prices

Answer 31

Equity price risk

Question 32

Arises from open or imperfect hedged position in particular foreign currency denominated assets and liabilities leading to fluctuations in profits or values as measured in a local currency

Answer 32

Foreign exchange risk

Question 33

risk associated with commodity prices volatility

Answer 33

Commodity price risk

Question 34

Risk of an economic loss from the failure of a counterparty to fulfill its contractual obligations, or from the increased risk of default during the term of the transaction

Answer 34

Credit Risk

Question 35

Corresponds to the debtor's incapacity or refusal to meet his/her dept obligations, whether interest or principal payment on the loan contracted, by more than a reasonable relief period from the due date

Answer 35

Default risk

Question 36

Risk of taking over the collaterized, or escrowed, assets of a defaulted borrower or counterparty

Answer 36

Bunkruptcy risk

Question 37

risk that the perceived creditworthiness of the borrower or counterparty might deteriorate

Answer 37

Downgrade risk

Question 38

Risk due to the exchange of cash flows when a transaction is settled. This risk is greatest when payment occur in different time zones, especially for foreign exchange transactions, such as currency swaps, where notional amounts are exchanged in different currencies

Answer 38

Settlement risk

Question 39

Comprises of: Funding liquidity risk and Trading liuidity risk

Answer 39

Liquidity Risk

Question 40

relates to a firm's ability to raise the necessary cash to roll over its debt; to meet the cash, margin, and collateral requirements of counterparties, and to satisfy capital withdrawals

Answer 40

Funding Liquidity Risk

Question 41

Often simply called liquidity risk, is the risk that an institution will not be able to execure a transaction at the prevailing market price because there is, temporarily, no appetite for the deal on the other side of the market

Answer 41

Trading Liquidity risk

Question 42

Refers to potential losses resulting from a range of operational weaknesses including inadequate systems, management failure, faulty controls, fraud, and human erros; in the banking industry.

Answer 42

Operational Risk

Question 43

Relates to the losses that may result from human errors such as pushing the wrong button on a computer, inadvertently destroying a file, or entering the wrong value for the parameter input of a model

Answer 43

Human factor risk

Question 44

Are risk related to legal or governmental actions that can have a material impact on the achivement of business objectives.

Answer 44

legal and regulatory risk

Question 45

Refers to the classic risk of the world of business, such as uncertainty about the demand for products, or the price that can be charged for those products, or the cost of producing and delivering products

Answer 45

Business risk

Question 46

refers to the risk of significant investments for which there is a high uncertainty about success and profitability. It can also be related to a change in the strategy of a company's vis-à-vis its competitors

Answer 46

Strategic risk

Question 47

The potential loss to financial capital, social capital and/or market share resulting from damge to a firm's reputation. It can be divided into two main classes: the belief that an enterprise can and will fulfill its promises to counterparties and creditors; and the belief that the enterprise is a fair dealer and follows ethical practices.

Answer 47

Reputation risk

Question 48

Concerns the potential for the failure of one institution to create a chain reaction or domino effect on other institution and consequently threaten the stability of financial markets and even the global economy

Answer 48

Systematic risk

Question 49

Are being applied to lessen the likelihood of the risk occurring and minimize the impact of the risk to the organization

Answer 49

Loss controls

Question 50

is about reducing the likelihood of an adverse event occurring, although it will also be concerned with reducing the magnitude of an event that does occur

Answer 50

Loss prevention

Question 51

Is concerned with reducing the magnitude of the event when it does materialize

Answer 51

Damage Limitation

Question 52

* Is concerned with reducing the impact and consequences of the event * Will be concerned with ensuring the lowest cost of repairs, as well as business continuity plans to ensure that the organization can continue operations following damage to the asset that has been affected

Answer 52

Cost containment

Question 53

When an organization realizes that solving a particular risk-based problem has brought a benefit rather than a cost

Answer 53

Upside of Risk

Question 54

Strategic issues are vitally important, and failure to implement strategy or the selection of an inappropriate strategy can be amongst the most devastating risks to hit an organization

Answer 54

Upside in Strategy

Question 55

The benefit of good risk management within projects are that the project is more likely to be delivered on time, to budget and at the required quality

Answer 55

Upside in Projects

Question 56

Risk management evaluation of operations can enable the organization to deliver the most effective and efficient activities, operations and processes

Answer 56

Upside in Operations