RIMS - CRMP Complete Study Guide; Exam Questions with Verified Detailed Correct Answers 10, Exams of Business Economics

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RIMS - CRMP Complete Study Guide; Exam

Questions with Verified Detailed Correct Answers

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Risks --- correct answer --- The effect of uncertainty on objectives

The chance of something happening that will have an impact on objectives

Being prepared for the worst and being poised to exploit opportunities as they are discovered

Enterprise Risk Management --- correct answer --- A strategic business discipline that supports the achievement of an organization's objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio.

Support Function: Business continuity and crisis management --- correct answer --- Risk identification, assessment and creation of emergency response and recovery plans related to threats or hazards that might lead to operational disruptions

Analysis --- correct answer --- A systematic examination and evaluation of data or information by breaking it into its component parts to uncover their relationships. An examination of data and facts to uncover and understand

cause-effect relationships, thus providing basis for problem solving and decision making.

To embed risk management in both routine and strategic decision, what should managers be able to recognize? --- correct answer --- The type of decision being made; Who should be included in the decision making process; Where in the process decisions are being made

Risk management strategies' general focus --- correct answer --- Meeting or exceeding an organization's objectives

Adhering to control-based objectives, rules and/or controls

Complying with regulatory requirements

Support Function: Internal Audit --- correct answer --- Risk identification, assessment and treatment through audit plans with focus on fraud, corruption, regulatory noncompliance and/or misrepresentation related to the organization's internal control systems, financial operations, financial statements and reporting as well as enterprise risk and the organization's risk management framework and process.

What steps can the risk management professional take to embed risk management in decision making? --- correct answer --- Include risk assessment in planning process; Leverage cross-functional risk assessment

team and subject matter experts to identify enterprise risks; Consider cascading and cumulative effects

Gap Analysis --- correct answer --- Technique that can be used to determine what steps might need to be taken to improve the organization's capacity to move from a current state to a desired future state.

Risk appetite --- correct answer --- The total exposed amount that an organization wishes to undertake on the basis of risk-return trade-offs for one or more desire and expected outcomes.

Communication and Consultation --- correct answer --- Risk management professional's role in Implementing Risk Strategies

Support Function: Legal --- correct answer --- Risk identification, assessment and treatment of risks related to the obligation an organization undertakes and transfers through contracting, as well as its compliance with applicable laws and regulatory obligations.

What are the typical failures in risk management which can be avoided if it is embedded in the decision making process? --- correct answer --- Program not integrated into strategy or its execution; Focused on the wrong risks; Not executed in a repeatable process; Risk management is practiced in a silo; Activity not viewed as being value added

Strategic Plan --- correct answer --- Determines that actions the organization will take at any stage of the planning period as circumstances change.

Risk owner --- correct answer --- The individual who is ultimately accountable for ensuring that risk is managed appropriately, including the implementation of selected responses.

Risk Identification Process --- correct answer --- Finding, Recognizing and Recording Risks

Support Function: Compliance --- correct answer --- Risk identification, assessment and treatment of risk related to regulations that may affect the organization's ability to operate in its respective jurisdictions, as well as activities that fall within its compliance and ethics programs.

To successfully integrate risk management into decision making, risk management professionals will rely on strategies that draw on personal and technical skills in --- correct answer --- Building organizational awareness;. Differentiating the different types of decisions used in varying situations using elements of decision quality; Performing various roles in the taking risk into account in decision-making process

Strategy --- correct answer --- A complete plan of action for whatever situations might arise in achieving an organization's goals within the established time.

Risk tolerance --- correct answer --- The amount of uncertainty an organization is prepared to accept in total or more narrowly within a certain business unit, a particular risk category or for a specific initiative.

Strategic Risk Management --- correct answer --- A business discipline that drives deliberation and action regarding uncertainties and untapped opportunities that affect an organization's strategy and strategic execution.

Value Chain --- correct answer --- The series of functions, processes, materials and activities (inputs) from concept to the eventual end user that creates and builds value at every step in order to deliver a product or service.

To build organizational awareness, the risk management professional needs to do the following: --- correct answer --- Be a persuasive communicator and facilitator; Have a clear communication plan; Engage interested parties, including primary and secondary audiences; Demonstrate that risk management creates the most value ; Develop feedback loops for continuous learning

Risk Analysis --- correct answer --- The process of characterizing and understanding the nature of risk and of considering the level of risk in the context of the organization's willingness to accept risk.

Support Function: Safety --- correct answer --- Risk identification, assessment and treatment of risks focused on preserving the physical well- being of employees and third parties.

Likelihood, Consequences, other criteria such as timing, duration, vulnerability and interdependencies --- correct answer --- Risk is typically analyzed on the basis of

Support Function: Information Security --- correct answer --- Risk Identification, assessment and treatment of risk arising our of or affecting information and technology infrastructure.

To build organizational awareness, risk management creates the most value when --- correct answer --- Risk management Aligns with strategic goals; Takes corporate culture into account; Involves key enterprise functions

Financial Statements --- correct answer --- Internal source of information that includes financial analytics or projections

strategic planning team --- correct answer --- The risk manager should be a part of the _______________________ to provide the structure discipline for consideration of risks in a strategic portfolio.

Internal Audit Reports --- correct answer --- Internal source of information that focuses on business practices important to the goals and reflection of regulatory environment of the organization

risk management --- correct answer --- __________________ should be an agenda item at every strategy session.

Support Function: Facilities --- correct answer --- Risk identification, assessment and treatment of the organization's properties, equipment and physical infrastructure systems.

Simple and frequent --- correct answer --- A type of decision that are automatic, taken in the moment. These decisions generally rely on the knowledge and capability of the decision maker using the back-of-the- napkin technique.

Bow tie analysis --- correct answer --- hazard analysis technique (cause and consequence)

Business impact analysis --- correct answer --- consider business impacts at a location or from a specific process

Support Functions: Quality --- correct answer --- Risk identification, assessment and treatment of risks related to products and services.

Significant importance or complex --- correct answer --- A type of decision that require more deliberate effort. These decisions generally have some period of planning and a longer decision timeline.

Organizational Structure --- correct answer --- Internal source of information that reports from different departments (HR, Legal, risk, operations, HS, environment, etc.)

Review the existing strategic plan --- correct answer --- The first step for the risk manager is to __________________________ to identify and understand the organization's goals.

key performance indicators --- correct answer --- Each high-level strategy objective should be broken down into more tactical, operational _____________________ for analysis.

External Organization Information --- correct answer --- External source of information that includes external audit reports, competitive analysis, rating agency, consumer reports, legal matters, media coverage

Strategic importance and complex --- correct answer --- A type of decision that call for formal planning process over a longer timeline in which multiple risk management techniques can be applied. Decision quality elements should be embedded in the process. Due to the importance of the decision, biases should be formally considered by the entire planning team.

Support Function: Project Management --- correct answer --- Assess and identify project risks, mitigate threats and capitalize on opportunities that my affect the success of a specific project.

Gap analysis --- correct answer --- determine steps to improve the organization's capacity to move from a current state to a desired, future state. (current available factors, success factors needed to achieve future desired objectives, highlighting the gaps)

How to obtain the real story aside from reading information? --- correct answer --- Talk to those inside the organization; Talk with external stakeholders ; Do site visits

assumptions --- correct answer --- The risk manager can then identify ________________ made by management when developing these goals.

Root Cause Analysis --- correct answer --- multiple techniques designed to identify the underlying or initiating risk sources or drivers. (fault tree analysis, event tree analysis, failure mode and effect analysis and cause- and-effect analysis - fish bone diagram)

Element of decision quality: Frame the issue; identify the need --- correct answer --- Is solving this problem or realizing this opportunity worthwhile? What are the intended outcomes?

Risk Culture --- correct answer --- The norms and traditions of behavior of individuals and of groups within an organization that determine the way in which they identify, understand, idsuss and act on the risk organization confronts and takes.

Influence analysis/diagrams --- correct answer --- identify the strength of influencing factors and help determine potential weighting for consideration during the risk assessment process. Define root causes for major risks, define the chain of events likely in a scenario and become the foundation for further modeling.

Training needs assessment: Why conduct the training? --- correct answer --- to tie the performance deficiency to a working need and be sure the benefits of conducting the traiing are greater than the problems being cuased by the performance deficiency. Conduct two types of analysis to answer this question: 1) needs versus wants analysis and 2) feasibility analysis

Element of decision quality: Explore doable alternatives --- correct answer --

- What options are available and how effective or disruptive will each one be in solving the problem or realizing the opportunity? What unintended consequences will each alternative create?

Knowledge --- correct answer --- A risk management professional must possess general business acumen to generate conversations that lead to deeper understanding of organizational structure; value chain; market analysis, PESTLE, etc.

key risks to each strategic goal --- correct answer --- The risk manager can then use in-depth risk analysis to assess the __________________ as well as the risks to the successful execution of the strategic plan.

Risk Register Analysis --- correct answer --- compile risk into a risk register to analyze and manage those risks in an organized way, typically by category.

Training needs assessment: Who is involved in the training? --- correct answer --- involve appropriate parties to solve the deficiency. Conduct a target population analysis to learn as much as possible about those involved in the deficiency and how to customize a training program to capture their interest.

Element of decision quality: Consider meaningful, reliable information --- correct answer --- Is the information accurate, applicable and useful? How will this information inform the decision-making process? What different interpretations of the data are possible and how will each one affect the decision-making process?

Skills --- correct answer --- A risk management professional must possess communication, technical and interpersonal skills to obtain organizational information.

Action plans --- correct answer --- _____________ should be developed to address gaps between the key risks to the strategic plan and the successful delivery of the mission.

Organize --- correct answer --- After obtaining information, what should be the next step to be done?

organizational strategy --- correct answer --- Risk strategy should be continually revised to align with ____________________.

Element of decision quality: Develop realistic options available to the decision makers --- correct answer --- How feasible, acceptable or desirable is each option and which will be most useful in achieving the objective?

Scenario analysis --- correct answer --- process of analyzing possible and plausible future events by considering alternative settings, circumstances and outcomes. It provides a basis for making decisions in the context of different conditions.

Training needs assessment: How can the performance deficiency be fixed? --

- correct answer --- Can training fix the performance deficiency or suggest other remediation if training is not appropriate? Conduct a performance analysis to identify what skill deficiency is to be fixed by a training remedy.

Risk analysis results to --- correct answer --- determine the risk adjusted probability of achieving strategic objectives; determine the key risks that may negatively or positively affect the achievement of the strategic objectives

Synthesize --- correct answer --- A process of combining information in ways that are coherent, logical and meaningful.

Element of decision quality: Understand clearly the values and trade-offs --- correct answer --- In pursuing each option, what are the consequences of making the trade-offs that will be needed? How clearly is the expected value understood?

Training needs assessment: What is the best way to perform? --- correct answer --- Is there a better or preferred way to do a task to get the best results? Are job performance standards set by the organization? Are thre governmental regulations to consider when completing the task in a required manner? Conduct a task analysis to identify the best way to perform.

Site analysis --- correct answer --- leaders at each site perform an assessment by analyzing and evaluating the potential risks based on what is being produced at the site and its environmental factors. This may include threat, vulnerability and criticality analyses.

Prioritize --- correct answer --- The step to choose the information that is most relevant, timely, useful and valuable for assessing risks that could affect the organization's objectives.

risk register --- correct answer --- ________________ is a tool that can be used to provide an overview or the organization's risk profile aligned to corporate strategy

Element of decision quality: Use logical correct reasoning --- correct answer --- What biases may be influencing reasoning?

Training needs assessment: When will training take place? --- correct answer --- What is the best timing to delivery training? Attendance at training can be impacted by work cycles, holidays and so forth. Conduct a contextual analysis to answer logistic questions.

SWOT analysis --- correct answer --- strengths and weaknesses (internal), opportunities and threats (external)

Monte Carlo analysis --- correct answer --- mathematical technique that generates random variables for modelling risk or uncertainty of a certain system (simulation). The random variables or inputs are modelled on the basis of probability distributions

Developing training goals: Align training to specific organizational performance goals --- correct answer --- Training should directly support specific organization performance goals, such as increasing, revenues, decreasing costs, teaching a new process, launching a new product or complying with regulations.

What are the primary risk management skills? --- correct answer - -- Organize and synthesize; Differentiate and prioritize; Employ computer and math skills

What are the components of enterprise risk profile that must be communicated to key stakeholders? --- correct answer --- Risk assessment; Risk appetite; Risk tolerance; Control process

Element of decision quality: Acting on the decision --- correct answer --- Are these resources available for allocation to the decision? How readily will the decision be accepted and supported by stakeholders?

Stress analysis --- correct answer --- a form of simulation used to determine reactions to different situations. Also used to gauge how certain stressors will affect a company or industry.

Developing training goals: Identify performance goals for learners --- correct answer --- Performance goals identify the tasks team members have to perform to reach the goal. This the time to explore the peformance gaps between what the members are doing now and what they need to be able to do to accomplish the goal.

Risk management professional's role: Strategic Advisor --- correct answer --- provides insights on known and emerging risks; shares specialized

knowledge on potential exposures; recommend actions and influence decisions, identify and solicit involvement from key stakeholders

How can you apply technical knowledge using risk management methods to business process? --- correct answer --- Identify the source of information; Rank its importance for the achievement of the organization's objectives; Compare the reliability of this source with other information sources; Determine whether to include the source as an important information source

knowledge and understanding --- correct answer --- Organizational risk competency capabilities: _________________ of operations

What are the methods of analyzing operations --- correct answer --- Identify the methods; Compare operations with intended culture and strategy; Validate

strong relationship --- correct answer --- Organizational risk competency capabilities: ________________ with key stakeholders

Developing training goals: Determine the learning activities --- correct answer --- This step involves identifying the activities that will help team members learn how to successfully achieve the specific perfor mance goals.

Risk management professional's role: Facilitator --- correct answer --- encourages participants to share relevant information; provides the team

with updates on the changes in the organization; Query and challenge what is said in order to fully develop a concept or issue and explore risks from a 360-degree perspective

Influence diagrams, scenario analysis, site analysis, SWOT --- correct answer --- Examples of qualitative methodology for analyzing data

Bowtie, business impact analysis, fault tree, cause/consequence analysis --- correct answer --- Examples of combined methodology for analyzing data

What do learning objectives address? --- correct answer --- Knowledge, skills or attitudes, what learners will know, such as the elements of risk management process, skills learners can hold, such as those relating to risk appetite and tolerance.

Risk management professional's role: Spectator --- correct answer --- refrains from influencing a risk dialogue; only take meeting notes or for staff development purposes, provide exposure to the risk management process

Conduct Risk --- correct answer --- Comprises a wide variety of activities and types of behavior that fall outside other main categories of risk ; Risk attached to the way in which a firm, and its staff, behave in a wide range of market-facing and internal situations; How customers are treated, remuneration of staff and how firms deal with conflicts of interest

ability to assess and plan --- correct answer --- Organizational risk competency capabilities: _______________________ for the appropriate number and type of resources necessary to execute a risk strategy and tactical plan

Monte Carlo, stress analysis --- correct answer --- Examples of quantitative methodology for analyzing data

How do learning objectives function? --- correct answer --- Learning objectives are SMART: five characteristics of effective learning objectives are that they are: specific, measurable, achievable, relevant and time bounded.

Risk management professional's role: Coordinator --- correct answer --- arranging logistics of formal risk management planning meetings; set the date, location and agenda; keep team current and engaged; this can include risk updates to support a report, highlight specific risk for comment, detailing successes or adverse events.

What are the steps to validate organizational information and behavior against an organization's intended culture? --- correct answer --- Scrutinize organizational functions; Compare the organization's business model and strategy with its operations to identify connections and points of dissonance

risk awareness --- correct answer --- Organizational risk competency capabilities: ____________ as a core cultural characteristic

What are attributes of a learning organization? --- correct answer --- Supports constructive criticism; Supports healthy debates; Open to understand attitudes about uncertainties, risk taking and tolerance

forward-looking, long-term view --- correct answer --- Organizational risk competency capabilities: ___________________ into emerging risks

Risk evaluation --- correct answer --- uses which risk criteria (risk appetite, risk tolerance, outputs from risk identification and risk analysis process) to determine which risks are acceptable and which require additional modification or treatment

Pre-decision environment --- correct answer --- Decision has not yet been made; RMP should be able to articulate the value that can be gained by including more formal risk management process into the decision-making process for more significant or complex project, initiatives and strategy setting

How are learning objectives communicated? --- correct answer --- Learning objectives have four parts: Each learning objective should indicate who will perform the action (person), the specific behavior to be performed, the

conditions under which the behavior will be performed, and the degree to which the person must perform the behavior.

Risk appetite --- correct answer --- is the total exposed amount that an organization wishes to undertake on the basis of risk-return trade-offs for one or more desire and expected outcomes.

Coaching --- correct answer --- Methods of helping others to improve, develop, learn new skills, find success, achieve aims and manage change and challenges. Providing support and advice to an individual or group in order to help them recognize ways to improve their competencies and effectiveness.

Active-decision Environment --- correct answer --- Decision is in the process of being made; RMP should identify the stakeholders, understand success measures; integration of risk management process; develop monitoring process

What are the steps in benchmarking? --- correct answer --- Compare organization with peers and competitors; Differentiate and prioritize to identify peers

trusted adivsor --- correct answer --- Organizational risk competency capabilities: Reputation for being technically risk-savvy and effective at

influencing key decisions. Has earned the trust of leadership and decision- makers and is seen as a _____________.

To benchmark the organization against its peers and competitors, which information must be obtained? --- correct answer --- Industry and trade publications; Stock analyst reports for publicly traded companies; Do your own research: Publicly available information such as google trends and prepare and competitive analysis

identify, assess and treat risk --- correct answer --- Organizational risk competency capabilities: Ability to _______________ within a clear appetite and tolerance context.

Risk tolerance --- correct answer --- is the amount of uncertainty an organization is prepared to accept in total - or more narrowly, within a certain business unit, a particular risk category, or for a specific initiative.

Post-decision Environment --- correct answer --- Decision has already been made; RMP should create a learning environment for stakeholders to identify risks to performance through the execution process; Determine when in execution process risk-based discussions still could be used to favorably impact the outcome

ERM integration in organizational strategies: Establish a purpose and value outcome for developing risk management competencies --- correct answer --

- What value outcome will risk management competencies provide for strategy development and performance at strategic, operational and tactical levels?

Risk interdependencies --- correct answer --- are situations where risks can have a cascading effect. Understanding this provides an opportunity to facilitate collaboration among various business units by addressing similar or related risks together.

ERM integration in organizational strategies: Establish guiding principles by articulating the organization's risk philosophy --- correct answer --- Risk philosophy aligned with vision, mission and values; create and protect value

Decision Making Environments --- correct answer --- Decisions can be categorized related to changes in the organization; scope and impact; level of familiarity

In benchmarking, you may analyze and compare information and you can look for: --- correct answer --- Gaps, strengths and weaknesses, differentiators; risks

matters to the organizational performance --- correct answer --- Organizational risk competency capabilities: Clear view into risk materiality and ability to narrow the focus to what really _________________.

Core competencies --- correct answer --- These are fundamental for successfully performing as a risk management professional, irrespective of level of experience or training. These competencies form the foundation for being able to apply

the related knowledge and skill components of the model for the needs of an organization.

Quantitative Scoring Methods --- correct answer --- Scoring Method when rating organization against peers based on readily available data such as stock price, market capitalization and earnings per share

Identify actual decision makers in the decision making environments --- correct answer --- Identify those who are accountable for performance

ERM integration in organizational strategies: Establish a risk governance model that fits within the organization's unique governance arrangements --

- correct answer --- Oversight, roles and responsibilities, structure unique to the organization

Indemnification --- correct answer --- contractual obligation placed on the indemnifier to return the indemnified to essentially the same financial condition that existed prior to the loss or claim or to stand in as the source for financing the legal liability.

Contractual risk transfer --- correct answer --- a legally binding agreement between two parties whereby one agrees to indemnify and hold another party harmless for specified actions, inactions, injuries or damages.

ERM integration in organizational strategies: Determine the risk management strategy that will build organizational competencies in support of the organization's strategy --- correct answer --- Common definitions, references, measurements and process; improve risk management competencies throughout the organization, iterative plan tasks aligned with organization's planning processs

Identify impact in the decision making environment --- correct answer --- Which decisions make the greatest impact on a specific strategy? Leverage information by using organized internal and external sources; information gathered from meetings; key inputs and outputs of the value chain and operations

Qualitative Scoring Method --- correct answer --- Scoring Method when rating organization against peers based on economic, environmental and philanthropic programs that increase brand quality

Core Competency: Attributes --- correct answer --- Qualities, characteristics and behaviors that, when displayed, will assist risk management professionals in

getting things done in areas where they do not hold direct responsibility. These attributes are particularly

important when adapting and integrating a horizontal, portfolio approach to risk management across an

organization.

What are the specific knowledge risk professionals need during benchmarking? --- correct answer --- Market analysis and environmental scanning; Business acumen-market analysis and value assessment; Due diligence and analytics

Core Competency: Organizational Knowledge --- correct answer --- Risk management professionals of all levels are expected to know unique aspects of their respective

organizations: its industry dynamics, its operating environment, and the activities it undertakes to achieve its

strategy, goals and objectives.

Hold harmless --- correct answer --- wording that requires one party to shield the other party from the effects of the legal liability assignable to transferor or obligor.