Question 9

Which is NOT an input to the risk identification process?

• A. Business analysis
• B. Assumptions
• C. Quantitative risk analysis results
• D. Lessons learned

Question 10

In the monitoring and review stage, control activities must adhere to which of the following?

a Controls have to be a principle of economy.

b Controls must be operational and simple.

c Controls have to identify the changes in the business environment.

d Measurements have to be congruent with the events measured.

Choose the correct combination:

• A.

  all of the above

• B.

  a,b,d

• C.

  b,c,d

• D.

  c,b

Question 11

Risk tolerance of an organisation can be expressed in terms of

• A. risk-averse, risk-neutral and risk-seeking attitudes.
• B. risk information, high impacts and high probabilities, balance sheet activities and capital.
• C. capital, earnings variances, liquidity and balance sheet activities and guidelines for investment.
• D. income statements, balance sheet activities, cash flow statements and budget statements.

Question 12

Risk identification is a crucial step in the ERM process. Indicate which of the following statements are correct in relation to risk identification?

a Business risk is static and a discrete phase in the process.

b It is important to be able to identify the risks in the business and understand how they fit into the overall business context.

c A risk checklist is used to list all the risks that were identified on previous projects within the business.

d A structured method of risk identification must be implemented so that consistent risk management can take place.

Choose the correct combination:

• A.

  a,c

• B.

  a,c,d

• C.

  b,c,d

• D.

  all of the above

Question 13

Company A is interested in acquiring XYZ Limited. Prior to making a decision, the board requests that management conducts a strategic review of XYZ limited and also performs the following:

an analysis of XYZ Limited;

a market analysis;

a product, portfolio and matrix analysis, and

an analysis of the general environment.

Which one of the following process mechanisms is Company A using?

• A.

  PEST analysis

• B.

  financial analysis

• C.

  gap analysis

• D.

  SWOT analysis

Question 14

What is the most important reason why comprehensive risk identification is significant to an organisation listed on the stock exchange and competing in a regulated industry?

• A. To state that risk identification has been comprehensive will support the satisfaction of regulatory requirements.
• B. To be able to state within annual financial statements that risk identification has been comprehensive will assist in putting shareholders at ease.
• C. The aim to be comprehensive will meet organisational risk policy requirements and board expectations.
• D. Unidentified risks are unmanaged risks.

Question 15

What is Latin Hypercube?

• A. A more modern sampling technique introduced after the development of Monte Carlo simulation.
• B. Name given to a type of statistical correlation used in illustrating the sensitivity of the most serious risks to the overall simulation results.
• C. Three-dimensional model (i.e. cube) for understanding the relationship between the sources of risk.
• D. Name of a probability distribution.