Risk Management

The risk of fraud declines dramatically if multiple employees are involved in different phases of a transaction, since fraud requires the collusion of at least two people.

• True
• False

}Corporate Governance is at the intersection of strategy, control and finance

• True
• False

Gamble is defined as the relative variation of actual loss from expected loss can be statistically calculated by some measure of dispersion.

• True
• False

Provides information about systems/threats and detailed scenarios for each potential attack.

The process involved with identifying, analyzing, and responding to risk is called Operations Management.

• True
• False

The corporate governance framework should recognize the rights of stakeholders as established by law, and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises, it is known as fairness.

• True
• False

The amount of acceptable risk is called risk adverse.

• True
• False

Those who fear loss and seek sureness.

• risk neutral
• risk lover
• risk takers
• risk averse

A key question for any risk assessment is how exactly you are going to identify the risks.

• True
• False

These are hazards such as fire, earthquakes, volcanic eruptions, floods, and storms.

• natural hazards
• operational hazards
• cultural hazards
• chemical hazards

Enterprise Risk Management (ERM) replaced traditional risk management (TRM), it expands upon TRM’s practices and techniques to consider more risks and offer additional solutions to finance or manage them.

• True
• False

___________________________ is the “set of encouraged and acceptable behaviors, discussions, decisions and attitudes toward taking and managing risk within an institution.

• Risk avoidance
• Risk reduction
• Risk culture
• Risk Management

These are hazards such as unsafe working conditions, unsafe highways, criminal assault, and poverty.

• natural hazards
• chemical hazards
• cultural hazards
• environmental hazards

Corporate Governance structures include the following except:

• Board of Directors
• Corporate Secretary
• Chair of the Board
• Stakeholders

The business corporation is an instrument through which capital is assembled for the activities of producing and distributing goods and services and making investments.

• True
• False

To get any of these sites up and running quickly, the organization must be able to move data into the new site’s systems.

• True
• False

Actual outcomes for an event or situation often the same with that of expected outcomes.

• True
• False

It is the uncertainty about a consequence.

• problem
• risk
• hazard
• dilemma

_________________ are smaller than bacteria and work by invading a cell and taking over its genetic machinery to copy themselves.

• none of the above
• viruses
• parasites
• germs

These are chemicals, types of radiation, or certain viruses that can cause or promote cancer.

• Carcinogens

If we have perfect certainty, we still have risk.

• True
• False

Substitutions are usually fixed temporary or permanent controls.

• True
• False

What is the first phase in Project Management?

• feasibility
• close out
• development
• design planning

When assets are physically protected, they are more likely to be stolen.

• True
• False

These are chemicals or forms of radiation that cause mutations, or changes, in the DNA molecules found in cells, or that increase the frequency of such changes.

• Mutagens

An effective system of internal controls should exist in all organizations to:

• all of the above
• Help them achieve their missions and goals
• For the welfare of all stakeholders
• Minimize surprises

The following are causes of business risk except:

• Human causes
• Natural causes
• Economic causes
• Personal causes

Find the expected value with the following: Choice A: P 500.00 Choice B: 60% chance of P500.00, 40% chance of P0.00 EV= ?

• P270.00
• P300.00
• P350.00
• P250.00

The following influences organizational culture except for:

• Educational attainment
• Social groups
• Family
• Friends

Which of the following is not a purpose of a Corporation?

• Human satisfaction
• Efficiency and efficacy
• inflexibility
• Social structure

Statistics—a mathematical statement about the likelihood that harm will be suffered from a hazard.

• True
• False

A risk is the probability of suffering harm from a hazard that can cause the following except:

• disease
• death
• injury
• economic gain

Real Options theory provides a means of estimating financial value of flexibility.

• True
• False

A reporting process should be in place to solicit input on potential fraud.

• True
• False

Fraud investigations are fact-finding missions.

• True
• False

Corporate structure is a system of relationships, defined by structures and process.

• True
• False

Separation of ownership and control implies agency relationships.

• True
• False

All are information gathering techniques except for:

• interviewing
• Delphi technique
• brainstormimg
• survey

Risk assessment is the process of using statistical methods to estimate how much harm a particular hazard can cause to human health or to the environment.

• True
• False

Which is not a tool used in risk management?

• Risk Hierarchical modeling
• Risk matrixes
• Contingency plan
• none of the above

Timeshares are like an exclusive use site and are owned.

• True
• False

A contingency plan includes the following except:

• corrective actions
• risk budgets
• forecasting
• preventive measures

Which of the following is an example of neurotoxins?

• PCBs
• Methylmercury
• Arsenic
• all of the above

Which of the following is not a type of hazards?

• chemical hazards
• natural hazards
• cultural hazards
• none of the above

_____________________ involves prevention (reducing the likelihood that the risk will occur) or mitigation, which is reducing the impact it will have if it does occur.

• Risk avoidance
• Risk control
• Risk transfer
• Risk mitigation

Catastrophic, critical, moderate, and negligible describe in the risk assessment matrix as level of severity of an adverse event's effect.

• True
• False

Another risk management process that will show you where to spend your time and money, and allow your team to prioritize their resources.

• Measuring risk
• Examining risk
• Identifying risk
• Implementing risk

Decision trees are the less powerful analysis tool.

• True
• False

The corporate governance framework should protect shareholder rights and ensure the equitable treatment of all shareholders, including minority and foreign shareholders, is known as responsibility.

• True
• False

Which of the following is not part of the policy?

• Code of Conduct
• Staff handbook
• Ethics
• Personal point of view

Investors must be compensated for accepting greater risk with low expected returns.

• True
• False

Business continuity planning ensures that critical business functions can continue if a disaster occurs.

• True
• False

A pathogen is an organism that can cause disease in another organism.

• True
• False

How can hazards be identified?

• Incident report forms o Self-Inspection Checklists
• Observation & consultation
• Regular maintenance checks o Specialists assisting with specific issues in the workplace
• All of the above

Hazard Management is the responsibility of both employees and management.

• True
• False

.If there is a ready market for the resale of stolen goods (such as for most types of consumer electronics), this presents an increased temptation to engage in fraud.

• True
• False

Good risk management doesn’t have to be resource intensive or difficult for organizations to undertake or insurance brokers to provide to their clients.

• True
• False

______________ are singe-cell organisms that are found everywhere.

• germs
• virus
• bacteria
• parasites

It is something that has the potential to cause harm to people, property or the environment.

• Hazard
• Problem
• Risk
• Danger

Which of the following is not one of the characteristics if a corporate form of business organization?

• legal personality
• limited liability for investors
• free transferability of investor interests
• decentralized management

Two key tasks of crisis management team:

At an extreme level, the effects of fraud can even shut down a company.

• True
• False

A decision is “Pareto optimal” (or efficient solution) if it is not dominated by any other decision.

• True
• False

The best method of controlling a risk is to eliminate the hazard.

• True
• False

These are rules and systems to carry out the work.

• engineering controls
• administrative controls
• elimination
• substitution

Find the expected utility with the following:

• 7.9 utils
• 8.7 utils
• 9.9 utils
• 10.2 utils

Which of the following is considered to be part of the external organization?

• Politics
• Regulators
• Social
• All of the above

Business risk is the possibilities a company will have lower than anticipated profits or experience a loss rather than taking a profit.

• True
• False

Find the expected value with the following: Choice A: P 250.00 Choice B: 60% chance of P250.00, 40% chance of P0.00 EV= ?

• P200.00
• P150.00
• P160.00
• P170.00

Embedded within business process applications, such as accounting software.

• application controls

Project problems can be reduced as much as 90% by using risk analysis.

• True
• False

The following are components of Contingency Planning except:

• Incident response planning
• Disaster recovery planning
• Risk mitigation planning
• Business continuity planning

Risk Management includes maximizing the results of positive risks and minimizing the consequences of negative events.

• True
• False

It is not necessary to have a written policy to convey the expectation of the board of directors and top management regarding managing fraud risk.

• True
• False

Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.

• True
• False

Fraud risk exposure should be assessed periodically to identify potential events the organization should mitigate.

• True
• False

Preference theory is based on the notion that individual attitudes towards risk vary.

• True
• False

Managers who follow utility theory analyze the size and nature of the risk involved in choosing a particular course of action.

• True
• False

Fraud risk assessment is where techniques should be established to avoid fraud risk events and mitigate impact on the organization.

• True
• False

Another category of risk that includes turnover and supplier failure.

• Hazard risk
• Strategic risk
• Financial risk
• Operational risk

Crisis management is a set of focused steps that deal primarily with the people involved taken during and after a disaster.

• True
• False

A successful risk assessment must check existing controls, and assess if more should be done to prevent harm.

• True
• False

Includes controls within IT processes support, such as program development and changes.

• IT General controls

The culture of a group arises from the repeated behaviour of its members.

• True
• False

The value of any asset is the Present Value of all future cash flows it is expected to provide over the relevant time period.

• True
• False

The risks which can be recovered are called ______________________.

• Insurable risk
• non- insurable risk
• Semi-insurable risk
• none of the above

Prevention techniques should be established to uncover fraud events when preventive measures fail or unmitigated risks are realized.

• True
• False

Corporate Governance is a primary driver of firm specific and market risk in valuation approaches.

• True
• False

Any situation or circumstance in which a loss is possible, regardless of whether a loss occurs is called loss avoidance.

• True
• False

It is a measure of the individual's implicit preference, for each policy in the risk environment.

• expected value
• utility
• expected utility
• value

A risk-adverse person leans away from risk, seeking as much security as possible.

• True
• False

Find the expected value with the following: Choice A: P 150.00 Choice B: 60% chance of P150.00, 40% chance of P0.00 EV= ?

• P90.00
• P120.00
• P100.00
• P110.00

Risk response includes mitigation & contingency plans.

• True
• False

A ___________________ is the amount paid by a (risk averse) individual to avoid risk

• risk premiums
• risk percentage
• risk level

Risk is anchored on a continuum of maximizing value and minimizing losses.

• True
• False

Flexibility typically has value by acting as a way to lessen the negative impacts of uncertainty.

• True
• False

Thyroid disrupters cause growth, weight, brain, and behavioral disorders.

• True
• False

_____________________ the risk means deciding that some risks are inherent in doing business and that the benefits of an activity outweigh the potential risks.

• Transferring
• Admitting
• Accepting
• Avoiding

The best risk control measure is assessment.

• True
• False

Only rudimentary services and facilities kept in readiness.

• hot sites
• cold sites
• warm sites
• safe sites

Find the expected value with the following: Choice A: P 200.00 Choice B: 70% chance of P150.00, 30% chance of P0.00 EV= ?

• P140.00
• P120.00
• P100.00
• P130.00

Insufficient working capital results in

• Lack of production
• Loosing interest
• Block of cash
• Lack of smooth flow of production

It is the last line of defense against a hazard, so while it shouldn't be your first choice when controlling risks, it can give added protection for any remaining level of risk, or should other controls fail.

• substitution
• elimination
• administrative control
• Personal Protective Clothes and Equipment

Immediate determination of the scope of the breach of confidentiality, integrity, and availability of information and information assets is called loss of confidence.

• True
• False

The overall planning for unexpected events is called________________________________.

• Contingency planning
• Directional planning
• Corporate planning
• Enterprise planning

To _______________ a risk, the organization simply has to not participate in that activity.

• lessen
• transfer
• avoid
• mitigate

If an organization gradually formalizes its risk management process and develops a risk culture, it will become more resistant to change.

• True
• False

Which of the following is the first step in risk management process?

• risk management planning
• quantitative risk analysis
• risk identification
• risk response planning

When a manager lacks perfect information or whenever an information asymmetry exists, risk arises.

• True
• False

A risk management process that is based on experience and internal history.

• Measuring risk
• Examining risk
• Identifying risk
• Implementing risk

The interests of the various security holders are the same.

• True
• False

The following are the core values of the OECD corporate governance framework except for:

• fairness
• transparency
• equality
• responsibility

Risk Premiums vary with specific issuers and issue characteristics including:

• default risk
• maturity risk
• liquidity risk
• all of the above

When a bidder makes an offer for another, it will usually inform the board of the target beforehand. If the board feels that the value that the shareholders will get will be greatest by accepting the offer, it will recommend the offer be accepted by the shareholders, this is known as "Friendly Takeover".

• True
• False

_______________________ involves giving responsibility for any negative outcomes to another party, as is the case when an organization purchases insurance.

• Risk avoidance
• Risk transfer
• Risk mitigation
• Risk control

Risk is a consequence of uncertainty.

• True
• False

Integrate RM into all phases of missions and activities is not one of the RM principles.

• True
• False

All are part of the internal organization except:

• Policy
• Board and Senior Management
• Colleagues
• Competitor

A condition of certainty exists when the decision-maker knows with reasonable certainty what the alternatives are, what conditions are associated with each alternative, and the outcome of each alternative.

• True
• False

The contingency plans should ensure that interfacing systems are identified and contingency/disaster planning coordinated.

• True
• False

What is the last step in risk management process?

• risk identification
• risk monitoring and control
• risk response planning
• qualitative risk response

Which of the following is not part of the economic organization?

• Economy
• Competitors
• Suppliers
• none of the above

It is a bulk batch-transfer of data to an off-site facility.

• Remote Journaling
• Electronic vaulting
• Database shadowing
• Data recovery

Those that are indifferent to uncertainty.

• risk averse
• risk takers
• risk lover
• risk neutral

The greatest risk from exposure to low levels of arsenic is brain damage in fetuses and young children.

• True
• False

The cause and effect relationships are not known and the future is highly unpredictable under conditions of certainty.

• True
• False

Uncertainty means having only one potential outcome for an event or a situation

• True
• False

These are chemicals that cause harm or birth defects to a fetus or embryo.

• Teratogens

Business risk can be defined as uncertainties or unexpected events, which are beyond control.

• True
• False

Corporate Governance is at the intersection of strategy, control and finance

• True
• False

Crisis management team manages event through:

• Supporting personnel and their loved ones during crisis
• Determining event's impact on normal business operations
• When necessary, making a disaster declaration
• all of the above

Successive anonymous questionnaires on project risks with responses summarized for further analysis is known as root cause analysis.

• True
• False

Business has many risks but it can't be avoided at all.

• True
• False

Whether the risk is insurable or non-insurable, only the loss can be shared but the risk remains.

• True
• False

It is one of risk categories that includes fires of injuries.

• Operational risk
• Strategic risk
• Financial risk
• Hazard risk

It is the transfer of live transactions to an off-site facility.

• Remote Journaling
• Electronic vaulting
• Database shadowing
• Data recording

Find the expected value with the following: Choice A: P 300.00 Choice B: 70% chance of P300.00, 30% chance of P0.00 EV= ?

• P200.00
• P250.00
• P210.00
• P220.00

Interests of agents (management) are the same with those of security holders, particularly from those of stockholders.

• True
• False

The hierarchy of controls is simply a list of the 5 best control measures, in order of priority.

• True
• False

Which of the following best describes the primary objective of a fraud investigation?

• To determine the guilt or innocence of the suspected individual(s).
• To express an opinion on the likelihood that fraud could occur within a given environment.
• To gather evidence about whether fraud has occurred.
• To assess the effectiveness of the organization’s anti-fraud controls.

Fully configured computer facility with all services are called _____________________.

• cold sites
• warm sites
• safe sites
• hot sites

Diagram that describes a decision and probabilities associated with the choices is called quantitative risk analysis.

• True
• False

Strategic risk includes the following except:

• new competitors
• brand reputation
• brand image
• government regulations

Categorize the risks to make them easier to handle.

• True
• False

The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the company, including its financial situation, performance, ownership, and governance structure, it is known as transparency.

• True
• False

Affect overall control environment.

• Entity-level controls

It is a general way of classifying risk preferences.

• risk tolerance
• risk avoidance
• risk attitude
• risk mitigation