Risk Management

Question 1

situation involving exposure to danger (Oxford Dictionary, 2024).

Answer 1

Risk

Question 2

TYPES OF RISK

Answer 2

Business Risk
Strategic Risk
Compliance Risk
Operational Risk
Reputational Risk
Default Risk or Credit Risk
Financial Risk
Interest Rate Risk
Liquidity Risk
Management Risk
Purchasing Power Risk

Question 3

TYPES OF RISK

exposure a company or organization has to factor(s) that will lower its profits or
lead it to fail. Anything that threatens a company’s ability to achieve its financial goals

Answer 3

Business Risk

Question 4

TYPES OF RISK

Arises when a business does not operate according to its business model or
plan

Answer 4

Strategic Risk

Question 5

TYPES OF RISK

Primary arise in industries and sectors that are highly regulated.
(e.g.Volkswagen Deiselate Scandal)

Answer 5

Compliance Risk

Question 6

TYPES OF RISK

This risk arises from within the corporation especially when the day-to-day
operations of a company fail to perform.

Answer 6

Operational Risk

Question 7

Risk of anytime a company’s reputation is ruined.

Answer 7

Reputational Risk

Question 8

Possibility of losing money on an investment on a business venture.

Answer 8

Financial Risk

Question 8

Refers to the probability that some or all of the investment or loaned
amount will not be returned.

Answer 8

Default Risk or Credit Risk

Question 9

The potential for investment losses that can be triggered by a move upward
in the prevailing rate for new debt instruments.

Answer 9

Interest Rate Risk

Question 10

It is associated with the uncertainty created by the inability to sell the investment
quickly for cash.

Answer 10

Liquidity Risk

Question 11

Either Financial, ethical, or otherwise- associated with ineffective, destructive
or underperforming management.

Answer 11

Management Risk

Question 12

The possibility that you will not be able to buy as much with your savings
in the future. It represents a loss of value due to inflation.

Answer 12

Purchasing Power Risk

Question 13

process of measuring or assessing risk and developing strategies to manage
it.

Answer 13

Risk Management

Question 14

Components of Managing Risk, ISO 31000

Answer 14

Principles of Risk Management

RISK MANAGEMENT FRAMEWORK

PROCESS OF RISK MANAGEMENT

Question 15

Purpose
▪︎ Creation and protection of value (mitigate the risk should have benefit over cost)
▪︎ It improves performance, encourages innovation.
▪︎ Supports the achievement of objectives.

Answer 15

Principles of Risk Management

Question 16

Elements of Principles of Risk Management

Answer 16

▪︎ Integrated
▪︎ Structured and comprehensive
▪︎ Customized
▪︎ Inclusive
▪︎ Dynamic
▪︎ Best Available Information
▪︎ Human and cultural factors
▪︎ Continual Improvement

Question 17

Elements of Principles of Risk Management
: Risk management is an integral part of all organizational activities

Answer 17

▪︎ Integrated

Question 18

Elements of Principles of Risk Management
A structured and
comprehensive approach to risk management contributes to consistent and comparable results.

Answer 18

Structured and comprehensive

Question 19

Elements of Principles of Risk Management
The risk management framework and process are customized and proportionate to
the organization’s external and internal context related to its objectives.

Answer 19

▪︎ Customized

Question 20

Elements of Principles of Risk Management
: Risk can emerge, change or disappear as an organization’s external and internal context
changes. Risk management anticipates, detects, acknowledges and responds to those changes and
events in an appropriate and timely manner.

Answer 20

▪︎ Dynamic

Question 20

Elements of Principles of Risk Management
Appropriate and timely involvement of stakeholders enables their knowledge, views
and perceptions to be considered. This results in improved awareness and informed risk
management.

Answer 20

▪︎ Inclusive

Question 21

Elements of Principles of Risk Management
The inputs to risk management are based on historical and current
information, as well as on future expectations. Risk management explicitly takes into account any
limitations and uncertainties associated with such information and expectations. Information
should be timely, clear and available to relevant stakeholders.

Answer 21

▪︎ Best Available Information

Question 22

Elements of Principles of Risk Management
Human behavior and culture significantly influence all adpects of
risk management at each level and stage.

Answer 22

▪︎ Human and cultural factors

Question 23

Elements of Principles of Risk Management Risk management is continually improved through learning and experience.

Answer 23

▪︎ Continual Improvement

Question 24

Purpose ▪︎ Is to assist the organization in integrating risk management into significant activities and functions. ▪︎ It will depend on its integration into the governance of the organization, including decisionmaking. ▪︎ This requires support from stakeholders, particularly top management

Answer 24

RISK MANAGEMENT FRAMEWORK

Question 25

RISK MANAGEMENT FRAMEWORK (Elements)

Answer 25

Leadership and commitment - Integration -Design -Implementation -Evaluation -Improvement

Question 25

RISK MANAGEMENT FRAMEWORK (Elements) ▪︎ Top management and oversight bodies, where applicable, should ensure that risk management is integrated into all organizational activities ▪︎ This will help the organization to align risk management with its objectives, strategy and culture; communicate the value of risk management to the organization and its stakeholders; promote systematic monitoring of risks ▪︎ Top management is accountable for managing risk while oversight bodies are accountable for overseeing risk management.

Answer 25

Leadership and commitment

Question 26

RISK MANAGEMENT FRAMEWORK (Elements) ▪︎ Integrating risk management relies on an understanding of organizational structures and context. ▪︎ Risk is managed in every part of the organization's structure. ▪︎ Everyone in an organization has responsibility for managing risk. ▪︎ Risk management should be a part of, and not separate from, the organizational purpose, governance, leadership and commitment, strategy, objectives and operations.

Answer 26

Integration

Question 27

▪︎ Understanding the organization and its context ▪︎ Articulating risk management commitment ▪︎ Assigning organizational roles, authorities, responsibilities and accountabilities ▪︎ Allocating resources ▪︎ Establishing communication and consultation

Answer 27

Design

Question 28

RISK MANAGEMENT FRAMEWORK (Elements) - developing an appropriate plan including time and resources; - identifying where, when and how different types of decisions are made across the organization, and by whom; - modifying the applicable decision-making processes where necessary; - ensuring that the organization's arrangements for managing risk are clearly understood and practiced.

Answer 28

Implementation

Question 29

RISK MANAGEMENT FRAMEWORK (Elements) In order to evaluate the effectiveness of the risk management framework, the organization should: - periodically measure risk management framework performance against its purpose, implementation plans, indicators and expected behaviour; - determine whether it remains suitable to support achieving the objectives of the organization.

Answer 29

Evaluation

Question 30

RISK MANAGEMENT FRAMEWORK (Elements) ▪︎ Adapting: The organization should continually monitor and adapt the risk management framework to address external and internal changes. In doing so, the organization can improve its value. ▪︎ Continually improving: The organization should continually improve the suitability, adequacy and effectiveness of the risk management framework and the way the risk management process is integrated.

Answer 30

Improvement

Question 31

Purpose The risk management process involves the systematic application of policies, procedures and practices to the activities of communicating and consulting, establishing the context and assessing, treating, monitoring, reviewing, recording and reporting risk.

Answer 31

PROCESS OF RISK MANAGEMENT

Question 32

PROCESS OF RISK MANAGEMENT (Elements)

Answer 32

-Communication and consultation - Scope, context and criteria -Defining the scope -External and Internal context context -Defining risk criteria -Risk assessment - Risk identification - Risk analysis - Risk evaluation -Risk treatment - Monitoring and review - Recording and reporting

Question 33

PROCESS OF RISK MANAGEMENT (Elements) ▪︎ to assist relevant stakeholders in understanding risk, the basis on which decisions are made and the reasons why particular actions are required

Answer 33

Communication and consultation

Question 34

PROCESS OF RISK MANAGEMENT (Elements) ▪︎ The purpose of establishing the scope, the context and criteria is to customize the risk management process, enabling effective risk assessment and appropriate risk treatment.

Answer 34

Scope, context and criteria

Question 35

PROCESS OF RISK MANAGEMENT (Elements) risk management process may be applied at different (e.g. strategic, operational, programme, project, or other activities)

Answer 35

- Defining the scope

Question 36

PROCESS OF RISK MANAGEMENT (Elements) is the overall process of risk identification, risk analysis and risk evaluation

Answer 36

Risk assessment

Question 36

PROCESS OF RISK MANAGEMENT (Elements) of the risk management process should be established from the understanding of the external and internal environment in which the organization operates and should reflect the specific environment of the activity to which the risk management process is to be applied.

Answer 36

External and Internal context context

Question 37

PROCESS OF RISK MANAGEMENT (Elements) to evaluate the significance of risk and to support decision making processes.

Answer 37

Defining risk criteria

Question 38

PROCESS OF RISK MANAGEMENT (Elements) is to find, recognize and describe risks that might help or prevent an organization achieving its objectives

Answer 38

Risk identification

Question 39

PROCESS OF RISK MANAGEMENT (Elements) involves comparing the results of the risk analysis with the established risk criteria to determine where additional action is required.

Answer 39

Risk evaluation

Question 39

PROCESS OF RISK MANAGEMENT (Elements) is to comprehend the nature of risk and its characteristics including, where appropriate, the level of risk

Answer 39

Risk analysis

Question 40

Potential Risk Treatments -avoid the activity that carry risks

Answer 40

Avoidance

Question 40

PROCESS OF RISK MANAGEMENT (Elements) is to assure and improve the quality and effectiveness of process design, implementation and outcomes.

Answer 40

Monitoring and review

Question 40

PROCESS OF RISK MANAGEMENT (Elements) Its purpose is to select and implement options for addressing risk

Answer 40

Risk treatment

Question 41

Potential Risk Treatments reducing the severity of the loss

Answer 41

Reduction

Question 42

Potential Risk Treatments accepting the loss or benefit of gain from a risk when it occurs

Answer 42

Retention

Question 42

Potential Risk Treatments sharing with another party the burden of loss or benefit of gain.

Answer 42

Sharing

Question 43

PROCESS OF RISK MANAGEMENT (Elements) ▪︎ The risk management process and its outcomes should be documented and reported through appropriate mechanisms.

Answer 43

Recording and reporting