SET 1

Risk management is the process of reducing the adverse consequences either by reducing the ___________ of an event or its __________

• Understanding and impact

• Likelihood and potential

• Understanding and potential

• Likelihood and impact

Business or Operational Risk refer to activities/operational within organization such as structure, systems, people, products and processes. These include the following scope of risk:

• Miscommunication which reflects from lack of communication channel

• Interruptions at business from business failure led to system's failure

• Leaking of major insider business information to rival

• Losing of main plant and machinery used in operation out of disposal

1. In risk management, the term "black swan" refers to high-probability, low-impact events.

• TRUE

• FALSE

Which of the following best describes risk appetite?

• The degree of uncertainty of an organization is willing to accept

• The total amount of risk an organization can take

• The process of identifying potential risks

• the method of mitigating risks

Hedging is a risk management strategy used to eliminate all exposure to financial risk.

• TRUE

• FALSE

Risk tolerance is the degree of variability in investment returns that an organization is willing to withstand.

• TRUE

• FALSE

In financial risk management, Value at Risk (VaR) is a statistical technique used to measure the risk of loss on a portfolio.

• TRUE

• FALSE

X is a large retailer, employing over 20,000 sales staff. The retail industry has a reputation for a high level of staff turnover. Which category in a risk map would best fit the resignation of a member of the sales staff?

• Low probability; low impact

• Low probability; high impact

• High probability; low impact

• High probability; high impact

When considering risk tolerance in relation to an organization's objectives, which of the following statements is incorrect?

• Risk tolerance reflects the acceptable deviation from the original objecive

• Higher risk toleerance may be set for objectives deemed less important

• Risk tolerance is independent of the relative importance of the related objectiv

• Management adjusts risk tolerance based on tje significance of achieving an objective

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.

• TRUE

• FALSE