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WorksheetsFinals_Risk Management
Total questions: 50
Worksheet time: 25mins
What is risk management?
Avoiding all business risks
The process of identifying, assessing, and controlling risks
Creating business risks to gain profit
Ignoring minor risks
Which of the following is NOT a principle of risk management?
Risk identification
Risk ignoring
Risk assessment
Risk treatment
Which of the following is a key element of risk management?
Random guesses
Ignoring feedback
Monitoring and review
Increasing uncertainty
Which of these is a correct step in the risk management process?
Hiding risk
Risk assessment
Risk denial
Assumption of risk
The term "risk" can be best defined as:
A guaranteed profit
Uncertainty of outcomes
Success without planning
Predicted failure
Which body's requirements should you be familiar with in enterprise-wide risk management?
WHO
UNESCO
SEC
UN
What is the final step in the risk management process?
Risk creation
Risk mitigation
Monitoring and review
Avoidance of responsibility
Which of the following is NOT part of risk treatment?
Accepting risk
Sharing risk
Ignoring risk
Reducing risk
Which of these is NOT a relevant risk terminology?
Hazard
Exposure
Dividend
Vulnerability
Enterprise-wide risk management helps organizations to:
Eliminate all risks
Improve decision-making
Avoid planning
Ignore market trends
Which is NOT a component of market risk?
Product Risk
Competitor Risk
Pricing Risk
Employee Fraud
Product complexity is categorized under:
Financial risk
Market risk
Operations risk
Liquidity risk
Which of these is considered a competitor risk?
Product packaging
Research and development
Market share
Delivery of warranties
Which of the following is an operations risk?
Interest rate volatility
Market strategy
Technological obsolescence
Pricing strategy
An example of integrity risk includes:
Currency fluctuation
Employee fraud
Product packaging
Warranty delivery
Health and safety fall under which risk category?
Market risk
Financial risk
Operations risk
Product risk
Foreign currency fluctuations are classified as:
Market risk
Financial risk
Operational risk
Environmental risk
Process stoppage is a form of:
Market risk
Financial risk
Operational risk
Product risk
Which of these is an environmental risk?
Health and safety
Liquidity
Technological innovation
Pollution or natural hazards
After sales service failure is part of:
Market risk
Product risk
Operations risk
Financial risk
What determines financial risk in a firm?
Product design
Capital structure
Employee count
Environmental policies
What is financial leverage?
Use of equity only
Risk-free investment
Use of fixed interest payments
Elimination of interest rates
Financial leverage increases:
Operating income
Certainty of profits
Income variability
Product complexity
Which of the following causes bond prices to decline?
Rising interest rates
Falling inflation
Lower market share
Increased productivity
Interest rate risk most commonly affects:
Employee salaries
Production costs
Bond price movements
Product packaging
An increase in interest rates will generally:
Increase stock values
Increase present value of dividends
Decrease bond prices
Eliminate all risks
Liquidity risk refers to:
Changes in market trends
Inability to borrow money
Uncertainty in selling assets quickly
Fluctuations in interest rates
A highly illiquid asset example is:
Company stock
Savings account
House in a buyer's market
Government bond
Investors may reduce the price of real estate due to:
Quick demand
High return guarantees
Urgency in selling
Tax incentives
Derivative risks are categorized under:
Market risk
Operational risk
Financial risk
Competitor risk
Which Key Risk Indicator 21. Arises when the product/services, business line or outsourcing activity does not meet or is not consistent with the Bank's strategic goals and/or expected return-on-investment or fails to innovate its product/services to keep up with the demands and requirements of the Bank?
Strategic
Reputation
Operational
Compliance
Which Key Risk Indicator 21. Arises when the vendor's services or performance don't meet the expectations of the Bank and its customers which causes the public to form a negative opinion about the Bank?
Strategic
Reputation
Operational
Compliance
Which Key Risk Indicator 21. Arises when the service provider exposes the Bank to losses due to inadequate or failed internal processes, technological failure, human error, fraud, and external events. This may result to unauthorized transactions, failure to process transactions & fulfill obligation with customers, regulations and other stakeholders?
Strategic
Reputation
Operational
Compliance
Which Key Risk Indicator 21. Arises when the services, products, or activities of the service provider fail to comply with applicable laws, regulations, and internal policies/procedures/standards and when internal controls are weak or non-existent (e.g., Anti Bribery and Corruption)?
Strategic
Reputation
Operational
Compliance
Which Key Risk Indicator Arises when outsourced services or products are provided by limited number of service providers or are concentrated in limited geographic location?
Vendor Concentration
Geographical
Legal
Exit Strategy
Which Key Risk Indicator 21. Arises when the Bank engages a foreign-based service provider, exposing the Bank to possible economic, social, and political conditions and events from the country where the provider is located?
Vendor Concentration
Geographical
Legal
Exit Strategy
Which Key Risk Indicator 21. Arises when the service provider exposes the Bank to legal expenses and possible lawsuits?
Vendor Concentration
Geographical
Legal
Exit Strategy
Which Key Risk Indicator Arises from over-reliance on one service provider, the loss of relevant skills in the Bank itself preventing it from bringing back the activity in-house and contract entered into wherein speedy exits would be expensive?
Vendor Concentration
Geographical
Legal
Exit Strategy
What type of risk arises from the potential for loss due to inadequate or failed internal processes, people, and systems?
Credit risk
Liquidity risk
Market risk
Operational risk
Which Key Risk Indicator is associated with the potential for financial loss due to changes in market conditions affecting the value of investments?
Strategic risk
Reputational risk
Compliance risk
Market risk
Which of the following is a common method for mitigating financial risk?
Speculation
Concentration
Hedging
Ignoring
Which of the following is an example of operational risk?
Supply chain disruptions
Regulatory changes
Currency exchange rates
Market fluctuations
What is the primary goal of risk assessment?
To ignore minor risks
To eliminate all risks
To identify and evaluate risks
To increase uncertainty
Which of these risks is associated with the failure of a business to meet its financial obligations?
Credit risk
Market risk
Reputational risk
Operational risk
Which of the following Inherent Risk Likelihood level pertains to High Risk (Red) rating?
Likely
Possible
Unlikely
Rare
Which Residual Risk Impact level would be interpreted as Low Risk (Green) rating?
Severe
Major
Moderate
Minor
Which Residual Risk Impact level is interpreted as High Risk (Red) rating?
Severe
Major
Moderate
Minor
Which of the following is not an Impact level based on Inherent and Residual Risk Assessment?
Severe
Control
Major
Moderate
Which of the following is a level of Risk Control Effectiveness
Very Tight
Tight
Some
No at all
All of the above
Which of the following is not a Moderate Risk (Amber) rating?
Rare
Unlikely
Some Controls in place
Moderate
