When there is a risk of loss resulting from
inadequate or failed internal processes,
people and systems or from external event,
it is called *
1 point
Liquidity risk
Operational risk
Moral hazard
Systemic risk
As part of an organizations’ risk
management process, when considering
risk and uncertainty, the risk team must be
aware that *
1 point
Uncertainty should only be considered
when reviewing long-term objectives.
Uncertainty should always be considered
completely separately from risk.
Risk assessment is the sole method of
reducing uncertainty.
Risk can apply to both opportunities and
threats to the organization.
Which portion of a risk management plan
explains the extent to which the plan will be
organized and carried out? *
1 point
Scope
Assignment
Schedule
Introduction
Statement
1:
Although
the
risk
management process is presented as
sequential, in practice it is iterative.
Statement 2: Monitoring and review in the
risk management process is the action
taken in response to risk identification,
analysis and evaluation *
2 points
Only statement 1 is true
Only statement 2 is true
Both statements are true
Both statements are false
A process implemented by management to
assess the effectiveness of internal control
performance over time. *
1 point
Quality control system
Test of controls
Risk assessment procedures
Monitoring of controls
A large organization is assessing a risk using
a typical risk management process and has
just established and identified the risks to
which it is exposed. What is likely to be the
next stage in the process? *
1 point
Analyzing risks
Eliminating risks.
Evaluating risks.
Treating risks.
Statement 1: ISO 31000 states that risk
management is an open ended process
designed to be highly customized and
tailored to the individual needs and
contexts of the organization implementing
it. Statement 2: It is stated in ISO 31000 that
oversight bodies are responsible for making
sure that risks are prioritized in accordance
with how they impact the organization’s
ability to create and deliver value. *
2 points
Only statement 1 is true
Only statement 2 is true
Both statements are true
Both statements are false
S1: Internal control is designed and
implemented to address all business risks
that threaten the achievement of the
objectives of internal control. S2: One of the
inherent limitations of internal control is
the lack of segregation of duties. *
2 points
Both statements are true.
Both statements are false.
Only statement 1 is true.
Only statement 2 is true.
Lack of internal control could lead to *
1 point
loss of assets
poor internal control reports
loss of customers
excessive compensation
poor management decisions
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This component of the risk management
framework includes setting objectives and
deadlines, defining decision making process
and evaluating and making changes to the
decision
making
process
when
appropriate. *
1 point
Design
Improvement
Integration
Implementation
Which of the following elements of the
internal control structure includes the
development of personnel manuals
documenting employee promotion and
training policies? *
1 point
control procedures
control risk
control environment
control policies
Within an organization, business risk can
typically be categorized as the *
1 point
Risk of an organization not being able to
meet its financial obligations.
Alleged or actual breach of contract
between an organization and counterparty.
Probability of a loss being inherent in an
organization’s operations and environment.
Uncertainty relating to the occurrence of an
insured event.
Who is ultimately responsible for providing
guidance and oversight on the risk
management
and
internal
control
process? *
1 point
operating management
the board
control functions
senior management
The risk management process involves
identifying, assessing and responding to
risks. What comes next in the process? *
1 point
Setting limits
Performing oversight
Monitoring
Revisiting the charter
Which of the following is an example of an
inherent limitation in a client’s internal
control system? *
1 point
The effectiveness of procedures depends on
the segregation of employee duties.
In the performance of most control
procedures, there are possibilities of errors
arising from mistakes in judgment.
Procedures for handling large numbers of
transactions are processed by information
technology (IT) equipment.
Procedures are designed to assure the
execution and recording of transactions in
accordance
with
management’s
authorization.
This is a set of components that support
and sustain risk management throughout
an organization *
1 point
Risk management process
Risk management principles
Leadership and commitment
Risk management framework
An effective internal control structure *
1 point
Is unaffected by changing circumstances
and conditions encountered by the
organization.
Reduces the need for management to
review exception reports on a day-to-day
basis.
Cannot be circumvented by management.
Eliminates risk and potential loss to the
organization.
Which of the following best defines risk
management? *
1 point
The potential for an unwanted outcome
resulting from an incident, event, or
occurrence, as determined by its likelihood
and the associated consequences.
A process of identifying the potential for an
unwanted outcome, determining what to
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do about it from among the available
alternatives, and then doing it.
A physical feature or operational attribute
that renders an entity, asset, system,
network, or geographic area open to
exploitation or susceptible to a given
hazard.
The management of the consequence of
something happening, described in either
quantitative terms of probability or
frequency.
S1: The control environment is the
foundation for effective internal control,
providing discipline and structure. S2: Risks
relevant to reliable financial reporting is
unrelated
to
specific
events
or
transactions. *
2 points
Both statements are true.
Both statements are false.
Only statement 1 is true.
Only statement 1 is false.
Which is not among the principles
contained in the development of the
science of internal control? *
1 point
preventive controls are the best forms of
control
supervisory review
fraud prevention
ensure objectives are met
The following are components of internal
control: *
1 point
Control environment, risk assessment
process, control activities, information
system and communication, and monitoring
of controls.
Organizational structure, management
philosophy, and planning.
Risk assessment process, backup facilities,
responsibility accounting and natural laws.
Legal
environment
of
the
firm,
management
philosophy,
and
organizational structure.
1 point
There is no universally accepted definition
of individual risks.
Risk categories are always applied
differently across an organization.
Audit and compliance functions must
always categorize risks differently.
Universal risk categorizations must always
be used.
An emerging issue in the practice of risk
management is that, based on a study,
there is no alignment with current
sustainability reports *
1 point
True
False
This means making sure that risk
management is part of all aspects of the
organization *
1 point
Implementation
Integration
Leadership and commitment
Evaluation
One way for a company to manage its risk in
relation to its employees' workplace
behavior is by *
1 point
Allowing employees to view all company
records.
Providing employees with the flexibility to
change company policies.
Permitting employees to use company
resources for personal use.
Encouraging employees to report workplace
misconduct.
Statement 1: The approach in risk
management is one size fits all.
Statement 2: In risk management, executive
alignment is crucial. *
2 points
Only statement 1 is true
Only statement 2 is true
Both statements are true
Both statements are false
Why can it be difficult for an organization to
categorize risks? *
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Management’s attitude towards aggressive
financial reporting and its emphasis on
meeting projected profit goals most likely
would significantly influence an entity’s
control environment when: *
1 point
Management is dominated by one
individual who is also a shareholder.
Internal auditors have direct access to the
board of directors and entity management.
The audit committee is active in overseeing
the entity’s financial reporting policies.
External policies established by parties
outside the entity affect its accounting
practices.
Consider whether lessons could be learned
for future management of risks.
Ensure that all significant risks are
eliminated immediately.
Evidence that all risks are measured in
financial terms only.
An example of risk mitigation is: *
1 point
Using
proven
technology
in
the
development of a product to lessen the
probability that the product will not work
Purchasing insurance
Both choices are correct
Neither of the choices is correct
Why is it important to understand the risk
perceptions of others when planning for
communication in the risk management
process? *
1 point
Unless everyone has the same risk
perceptions, effective risk management is
impossible.
To communicate effectively, you must
accurately and appropriately address the
risk perceptions of others.
Revealing the risk perceptions of others
could create a conflict of interest and derail
the process.
Effective communication must avoid
influencing the risk perception of others.
Which of the following best describes the
role of risk communications in risk
management? *
1 point
External communications are far more
important to the entire risk management
process than internal communications.
Communications is not a major factor in the
DHS Risk Management Cycle in comparison
with the other steps.
The risk management process relies on
effective communication mostly at the
beginning of the DHS Risk Management
Cycle.
Communications underpin the entire risk
management process and should be
ongoing throughout the life of a risk
management action or strategy.
One of the primary reasons that an
organization should monitor and regularly
review its risk management process is to *
1 point
Evidence that an internationally-recognized
framework is followed at all times.
When a bank chooses the wrong strategy or
follow a long-term business strategy which
might lead to its failure, it is called *
1 point
Business risk
Market risk
Operational risk
Credit risk
The objective of the recording function of
transactions (in the context of internal
accounting control) is to *
1 point
Assure compliance with the rules of all
regulatory bodies having jurisdiction over
the reporting entity.
Permit preparation of financial statements
in accordance with GAAP and to maintain
accountability of assets.
Encourage operational efficiency and
adherence to prescribed managerial
policies.
Limit access to assets and to permit
preparation of financial statements in
accordance with GAAP.
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Understanding the potential causes of risk
events will primarily help an organization
to *
1 point
Improve internal audit procedures.
Comply with corporate governance
standards.
Reduce the frequency of loss
Eliminate all risks
Risks can arise or change due to
circumstances such as the following,
except: *
1 point
No new employees have been hired by the
company.
The accounting and financial reporting
framework has experienced significant
revisions.
There is a change in the regulatory or
operating environment.
The company switched from manual
information systems to a computerized
system.
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