question 1

Organisations attempting to implement a formal structured approach to risk management need to treat the implementation itself as a project, requiring clear objectives, success criteria, proper planning and resourcing. Which of the following is the most important aspect of embedding risk management in an organisation?

• A. A framework for ERM tailored to the organisation.
• B. Active monitoring of threats and opportunities.
• C. A risk policy effectively communicated to staff.
• D. Clearly identified senior management support for enterprise risk management (ERM).

Question 2

ABC Limited has been subject to an internal audit. The internal audit report indicated the staff in the debtor's department is not properly trained with regard to completing individual debtor reconciliations. As a result of this, the reconciliations have incorrect reconciling items. The fact that the staff is not properly trained is an example of a(an)

• A. opportunity.
• B. risk.
• C. internal control.
• D. risk source.

Question 3

The boards role should be to steer the corporation towards corporate governance policies that support

• A. short-term sustainable growth in stakeholder value.
• B. long-term sustainable growth in shareholder value.
• C. short-term sustainable growth in shareholder value.
• D. long-term sustainable growth in stakeholder value.

Question 4

The purpose of a risk management framework is to

• A. communicate externally that risk management is being practised.
• B. assist an organisation in integrating risk management into its management processes.
• C. show that the organisation is following contemporary practices.
• D. satisfy internal and external audit requirements.

Question 5

Policy formulation, strategic thinking, supervisory management and accountability are the four main functions of the board which aim to

• A. strengthen the role of the board.
• B. manage the diversity of business risk.
• C. improve operational efficiency.
• D. manage risk and opportunity.

Question 6

The risk management policy of an organisation should address the specific responsibilities of the

• A. board, the corporate governance committee and the risk committee.
• B. remuneration and marketing committee.
• C. risk committee, the board and the remuneration committee.
• D. stock exchange committee, the marketing committee and the board.

Question 7

Which one of the following is a benefit of effective risk and opportunity management?

• A. Lower economic returns
• B. Increased stakeholder confidence
• C. Improved profit certainty
• D. Increased shareholder value

Question 8

Enterprise risk management (ERM) may be defined as

• A. being a reactive and responding system to events as they unfold.
• B. a system aimed at satisfying stock exchange requirements.
• C. a tick-box process ensuring legislation is complied with.
• D. a systematic process embedded in a companys system of internal control to support the fulfilling of the companys objectives.