Risk Management Policies and Procedures

Question 1

What is meant by “the tone at the top.”

Answer 1

The extent to which top management is ethical and pro-active in establishing an ethical and moral tone and culture.

Question 2

According to COSO, what four critical accounting activities should be segregated?

Answer 2

Authorizing - Recording - Safeguarding - Reconciling, oversight and auditing

Question 3

Define “cross-enterprise risk.”

Answer 3

A risk that occurs in multiple units in an organization. A cross-enterprise risk.

Question 4

Define “risk appetite.”

Answer 4

According to COSO, the amount of risk exposure, or potential adverse impact from an event that an organization chooses to accept, or retain, as opposed to sharing, avoiding, reducing, or eliminating the risk.

Question 5

Define “enterprise risk management.”

Answer 5

According to COSO, the methods and processes used by organizations to identify and manage the events and circumstances that influence the organization’s ability of achieve its objectives.