Understanding Risk Management Strategies: A Comprehensive Guide, Exams of Business Economics

Download Understanding Risk Management Strategies: A Comprehensive Guide and more Exams Business Economics in PDF only on Docsity! RIMS CRMP-Implementing the Risk Process Verified 100% Correct Risks - Correct answer the effect of uncertainty on objectives The chance of something happening that will have an impact on objectives Being prepared for the worst and being poised to exploit opportunities as they are discovered Risk management strategies' general focus - Correct answer Meeting or exceeding an organization's objectives Adhering to control-based objectives, rules and/or controls Complying with regulatory requirements Communication and Consultation - Correct answer Risk management professional's role in Implementing Risk Strategies Risk Identification Process - Correct answer Finding, Recognizing and Recording Risks Risk Analysis - Correct answer the process of characterizing and understanding the nature of risk and of considering the level of risk in the context of the organization's willingness to accept risk. Likelihood, Consequences, other criteria such as timing, duration, vulnerability and interdependencies - Correct answer Risk is typically analyzed on the basis of Page 1 of 16 Bow tie analysis - Correct answer hazard analysis technique (cause and consequence) Business impact analysis - Correct answer consider business impacts at a location or from a specific process Gap analysis - Correct answer determine steps to improve the organization's capacity to move from a current state to a desired, future state. (Current available factors, success factors needed to achieve future desired objectives, highlighting the gaps) Root Cause Analysis - Correct answer multiple techniques designed to identify the underlying or initiating risk sources or drivers. (Fault tree analysis, event tree analysis, failure mode and effect analysis and cause- and-effect analysis - fish bone diagram) Influence analysis/diagrams - Correct answer identify the strength of influencing factors and help determine potential weighting for consideration during the risk assessment process. Define root causes for major risks, define the chain of events likely in a scenario and become the foundation for further modeling. Risk Register Analysis - Correct answer compile risk into a risk register to analyze and manage those risks in an organized way, typically by category. Page 2 of 16 Contractual risk transfer - Correct answer a legally binding agreement between two parties whereby one agrees to indemnify and hold another party harmless for specified actions, inactions, injuries or damages. Hold harmless - Correct answer wording that requires one party to shield the other party from the effects of the legal liability assignable to transferor or obligor. Risk sharing/transfer - Correct answer action taken when i) costs of retaining risk exceeds the organization's risk tolerance; ii) risks or some portion can be transferred at a lower cost, iii) risks should be apportioned based on an agreement and iv) it is required by regulation. Insurance - Correct answer risk transfer mechanism that ensures full or partial financial compensation for the loss, damage and legal obligations of a policy holder or beneficiary. Consultative role of risk management professionals in implementing solutions - Correct answer Strategic advisors Solutions advocates Collaboration facilitators Risk Monitoring - Correct answer Observe Check the progress or quality of something over a period of time Keep under systematic review Page 5 of 16 Prioritize risks to be monitored - Correct answer in monitoring risks, what should be done to identify the greatest potential for disrupting or accelerating performance? Risk metrics (key risk indicators) - Correct answer in monitoring risks, what should be integrated into the performance objectives of the organization? Reviews of the risk treatment plans - Correct answer in monitoring risks, what should be scheduled as an ongoing agenda item in the responsible leader's staff agenda? Key performance indicators (KPI) - Correct answer help a firm see how it is performing in relation to its strategic goals and objectives. Key risk indicators (KRI) - Correct answer are leading indicators of risk to business performance, giving early warning about potential risks. Progress reports - Correct answer What should be monitored in terms of significant risks and use of risk process? Leader - Correct answer Risk management professional's role is to drive adoption of enterprise-wide approach to enable the organization to achieve its objectives; develop awareness for broad risk management competencies; enable execution of consistent risk assessment methodologies, guiding improvement and monitoring efforts. Page 6 of 16 Catalyst - Correct answer Risk management professional's role is to provide insights on emerging risks and offer perspectives on leading practices; share knowledge on potential exposures and the implications to the organization. In facilitating risk identification, risk management professional servers as - Correct answer Data consolidator to aggregate and synthesize data that enable people within an organization to make risk-effective decisions. Profitability and value - Correct answer A benefit of ERM that provides improved profitability, increased shareholder value, reduced financial volatility Cross-functional view and common risk assessment process - Correct answer An ERM method which can maximize the efficiency of an organization's risk management resources and activities Unmanaged risk - Correct answer greatest source of waste in business and economy and can have a damaging effect on companies, employees and communities where the business operates. Risks viewed as an interrelated portfolio - Correct answer Coordinated and strategic approach of risk management Risk management - Correct answer strategic business discipline that supports the achievement of an organization's objectives by addressing the Page 7 of 16 executes on its visions and strategy. It evaluates the strength in planning, communicating and measuring core enterprise goals with a risk-based process, and the extent to which progress deviates from expectations. RMM attribute: Business resiliency and sustainability - Correct answer RMM attribute: This attribute evaluates the extent to which business continuity, operational planning and other sustainability activities are approached with a risk-based methodology. Communication - Correct answer Risk Management Professional's role to convey information. Consultation - Correct answer Risk Management Professional's role to anticipate that participants engage in conversation with the expectation that dialogue will contribute to and shape decisions. Engage Key Stakeholders - Correct answer A step in identifying risk whereby considering those most closely associated with achieving the organization's objectives. Identify and gather available data - Correct answer A step in identifying risk whereby the purpose is to identify what might happen or what situations might exist that may affect the achievement of the organization's strategy, objectives and tactical plans. Data collection - Correct answer A strategy for gathering data to identify a risk that should be comprehensive, strategic and timely Page 10 of 16 Surveys, interviews and focus groups - Correct answer Methodologies used for gathering data to identify a risk Benchmarking, document review, assets and process reviews - Correct answer A strategy for gathering data to identify a risk involving external resources Existing capabilities - Correct answer A strategy for gathering data to identify a risk that includes understanding current risk management processes and approaches, existing controls and their levels of effectiveness to identify known risks Progress report should include these issues in the normal business - Correct answer Material risk target outcome; Specific activities that have taken place since the last report; Challenges in executing the risk treatment plan; A trend assessment in the risk profile against the targeted outcome When creating reports and presentations, the following must be considered - Correct answer Understand the audience; Understand the purpose; Type and detail of information; Insights and recommendations In what areas and activities can risk management professional give advice? - Correct answer Strategy development and performance; Enterprise-wide or related areas, whether internal or external; Specific operational and functional areas; Development of new initiatives; New and evolving issues; Significant changes Page 11 of 16 What is the process of giving advice? - Correct answer Evaluate metrics and reports; Gain insights into organizational performance; Validate insights with key stakeholders; Develop recommendations; Communicate recommendations An enterprise-wide risk management framework views risk within an organization's: - Correct answer Unique strategy; Tolerance; Culture; Decision Making; Governance Risk Categorization - Correct answer helps assign accountability, allocate resources, and ensure that the risk reports are more easily understood by top management Identify risk; Analyze risk; Evaluate, select and implement responses; Monitor results and revise - Correct answer Describe the risk process Brainstorming; Checklists; Interview and self-assessment; Facilitated workshops; Risk questionnaires and risk surveys; Scenario analysis; others such as value chain analysis, system design review, process analysis and benchmarking - Correct answer Specific techniques for identifying risks include: Reporting structure and top management views - Correct answer Determine the risk categorization that most closely aligns with: Page 12 of 16 reporting and monitoring - Correct answer Elements of treatment plans: the required ___________________ of risks as part of normal business activity and reporting Accountability for risk - Correct answer this matters when it is measured and can achieve a trickledown effect as the operations and functional managers engage their staff to support in the achieving the objectives What should be evaluated that may dramatically impact the organization's strategic goals? - Correct answer effect of significant acquisitions, organizational and process changes, other changes How can risk management professionals gain insights into organizational performance related to the effectiveness of the organizational risk management? - Correct answer evaluating metrics and reports that result from a disciplined and informed risk management process How can risk management professionals gain credibility and engagement with key stakeholders - Correct answer validating insights with key stakeholders priorities - Correct answer Monitoring risk process: setting _______ based on desire performance performance objectives - Correct answer Monitoring risk process: developing risk metrics integrated with _______________ Page 15 of 16 monitoring schedules - Correct answer Monitoring risk process: Establishing _________________ to check progress over time expected value of the of the collective objectives - Correct answer Monitoring risk process: validating whether the ___________________ from making risk-informed decisions and implementing risk solutions have been achieved Page 16 of 16