MULTIPLE CHOICE QUESTIONS

1 A fire insurance policy on a manufacturing plant is an example of a risk reduction alternative that would reduce which component of the inherent risk of a plant fire?

a. Likelihood only

b. Impact only

c. Both likelihood and impact

d. Neither likelihood nor impact

2 An organization's overall desired level of risk taking is referred to as its

a. riskiness.

b. inherent risk.

c. monitoring ability.

d. risk appetite.

3. A common way to assess the likelihood of an inherent risk is to measure its

a. incremental cost.

b. probability.

c. lost revenues.

d. company reputation.

4 Which of the following risk response items would not be affected by an increase in the cost of managing a strategic alliance partnership that was formed to reduce a top organizational risk?

a. Risk response net benefit

b. Risk response cost

c. Risk response benefit

d. All of these.

e. None of these.

5 Beginning with strategy, which of the following items lists the areas of the business sustainability cycle in the correct order in which they should be performed?

a. Sustainability assurance, sustainability reporting, risk management, performance measurement

b. Performance measurement, risk management, sustainability reporting, stakeholder engagement

c. Stakeholder engagement, risk management, sustainability assurance, performance measurement

d. Risk management, stakeholder engagement, sustainability reporting, sustainability assurance

e. Stakeholder engagement, risk management, performance measurement, sustainability reporting

6 In which areas of an organization's value chain can important business sustainability risks or opportunities arise?

I. Research & Development

II. Customer Service

III. Manufacturing

IV. Warehousing & Distribution

a. I only

b. II only

c. III only

d. II and IV

e. I, II, III, and IV

7. Exhibit 13.8 contains results from KPMG's survey of corporate responsibility reporting,21 showing how the percentage of the world's 250 largest companies (i.e., the larger green bubbles) that issue corporate responsibility reports has changed over the years. According to Exhibit 13.8, when was the first year in which a majority (i.e., more than 50%) of these companies issued corporate responsibility reports?

a. 1999

b. 2002

c. 2005

d. 2008

e. 2011

8 Which of the following items correctly describes an important difference (in most countries and business environments) between traditional financial reporting and corporate sustainability reporting?

a. Corporate sustainability reporting is required, while traditional financial reporting is not required.

b. Corporate sustainability reporting is voluntary, but the contents of any such report are required to be verified by an independent third party, whereas traditional financial reporting is required and its contents must be verified by an independent third party.

c. No published reporting standards exist for organizations to follow when preparing and issuing corporate sustainability reports, whereas published reporting standards do exist for organizations to follow when preparing and issuing traditional financial reports.

d. None of these.

9. Which of the following is a prevention cost?

a. Inspection of materials

b. Continuing supplier verification

c. Prototype inspection

d. Recalls