Chapter 6

Question 1

What is risk?

Answer 1

Risk in a business is the chance that future events or results may not be as expected. Risk can be quantified by signing probabilities to various levels of loss.

Question 2

What is a downside risk?

Answer 2

The risk the results may be worse than expected

Question 3

What is an upside risk?

Answer 3

The risk that results may be better than expected

Question 4

What does risk is quantifiable mean?

Answer 4

Possible outcomes have associated probabilities and allow the use of mathematical techniques

Question 5

What does it mean uncertainty is unquantifiable?

Answer 5

The outcome cannot be mathematically modelled. It is difficult to incorporate uncertainty into decision-making models.

Question 6

What reasons do companies take risks?

Answer 6

To increase financial return
To gain competitive advantage

Question 7

What does it mean to increase financial return?

Answer 7

It is generally the case that firms must be willing to take high risk if they want to achieve higher returns

Question 8

What does it mean to gain competitive advantage?

Answer 8

To generate higher returns of business may have to take more risks in order to be competitive

Question 9

What are the different types of risk?

Answer 9

Strategic risk
Environmental risk
Product risk
Market risk

Question 10

What is strategic risk?

Answer 10

The risk of the organisation strategy fails

Question 11

What is environmental risk?

Answer 11

The risk at the organisation fails to adapt to changes in its environment

Question 12

What is product risk?

Answer 12

The risk of the organisations products fail

Question 13

What is market risk?

Answer 13

The risk organisation fails to adapt to change changes in its market

Question 14

What is operational risk?

Answer 14

Refers to potential losses that might arise in business operations. It is the risk of losses resulting from inadequate or failed internal processes, people and systems or external events.

Question 15

Examples of operational risks are

Answer 15

Business disruption risk
Regulator risk
People risk
Process risk

Question 16

What is businessdisruption risk?

Answer 16

This is the risk of the organisations operations cannot continue to operate as normal

Question 17

What is regulatory risk?

Answer 17

This is the risk of the business fails to meet regulatory standards or legislation

Question 18

What is people risk?

Answer 18

The risk of errors or problems caused by the people within the organisation

Question 19

What is process risk?

Answer 19

This is the risk that processes are not efficient or fail

Question 20

What is cyber risk?

Answer 20

Is a type of operational risk and is the risk of financial loss?, Disruption., Or damage to an organisation caused by issues with the information technology systems they use.

Question 21

What is malware?

Answer 21

This is a term used to describe different types of malicious software, regardless of the purpose.

Question 22

What are the most common types of malware?

Answer 22

Ransomware
Botnets
Spyware
Trojan
Malvertising

Question 23

What is Ransomware?

Answer 23

Software that prevents access to data until a ransom is paid

Question 24

What is botnets?

Answer 24

Networks of infected computers that are under the control of attacker

Question 25

What is spyware?

Answer 25

No, that is designed to spy on the victim and report back to the attacker

Question 26

What is Trojans?

Answer 26

Legitimate software that secretly contains and releases malicious software into a system

Question 27

What is maladvertising?

Answer 27

Online advertisement as malicious software written into the code

Question 28

What is reputation risk?

Answer 28

Reputation is the opinion people have and communicate about something, so reputational risk is the risk that people have a negative opinion of an organisational and share that opinion with other people

Question 29

Reputation risk for many organisations is what

Answer 29

The downside risk is the better the reputation of the business the more risk there is a losing that reputation

Question 30

What are the considerations of reputational risk?

Answer 30

Employees management and accounting and fraud and bribery and corruption

Question 31

Why is accounting reputation risk?

Answer 31

Any company found being operating dubious accounting practices would lose confidence of customers and investors

Question 32

Why is fraud a reputation risk?

Answer 32

If a company allows for to take place, it does not allow appropriate action. It can lead to concerns from stakeholders.

Question 33

Why can bribery and corruption be reputational risk?

Answer 33

If an organisation accident inappropriate manner by offering or accepting or any form of correction this will damage their reputation

Question 34

What is financial risk?

Answer 34

The risk of change in a financial condition stitches exchange rate interest rate credit rating of a customer or the price of goods

Question 35

Financial risk can confirm a number of areas

Answer 35

Credit risk, interest rate risk, debt risk

Question 36

What is the Tara framework?

Answer 36

Transfer avoid reduce accept

Question 37

What is transfer in Tara?

Answer 37

Transfer race, wholly or in part to a third-party

Question 38

What is a avoid Tara?

Answer 38

Many risks are unavoidable, so the only choice here may be not to invest

Question 39

What is reduce in Tara?

Answer 39

Reduce or mitigate risks by limiting probability, especially of downsize exposure

Question 40

What is accepting Tara?

Answer 40

Except the risk can deal with the consequences