Question 1

Among the goals of the own risk and solvency assessment (ORSA) is the promotion of effective enterprise risk management (ERM) for insurers.

Group of answer choices

True

False

Question 2

Diversifiable risks tend to be highly correlated.

Group of answer choices

True

False

Question 3

Emerging risks tend to exhibit uncertain relevance and high levels of uncertainty.

Group of answer choices

True

False

Question 4

Managers should always choose a bottom-up approach to ERM instead of a top-down approach.

Group of answer choices

True

False

Question 5

Good corporate governance is an important component of effective ERM regimes.

Group of answer choices

True

False

Question 6

A risk management policy statement is a tool for communicating the objectives of the risk management program.

Group of answer choices

True

False

Question 7

The expectations of external stakeholders should not be taken into account when determining an organization's risk appetite.

Group of answer choices

True

False

Question 8

A critical weakness of the ISO 31000 Standard is that it fails to take into account the risk assessment process.

Group of answer choices

True

False

Question 9

As a general matter, strategic management involves creating a plan, putting the plan into action, and monitoring the organization's results to determine whether the plan is working as envisioned.

Group of answer choices

True

False

Question 10

Monitoring and bonding costs are types of agency costs.

Group of answer choices

True

False

Question 11

Audit committees of boards of directors are charged with determining the pay and benefits for the chief executive officer and other senior managers.

Group of answer choices

True

False

Question 12

Under the European Corporate Law Directive on Auditing, the board of directors is responsible for setting a corporation's risk appetite.

Group of answer choices

True

False

Question 13

Strategy evaluation or control is the third stage of the strategic management process.

Group of answer choices

True

False

Question 14

Turnaround strategies typically involve temporary, across-the-board cost-cutting measures to improve an organization's future strength.

Group of answer choices

True

False

Question 15

As a general matter, strategic risk management (SRM) takes into account both internal and external risks.

Group of answer choices

True

False

Question 16

For each key performance indicator (KPI), there is a tolerance level for how much deviation from the standard established in the KPI will be acceptable.

Group of answer choices

True

False

Question 17

Cost of raw materials is an example of an external key risk indicator (KRI) that a manufacturer might monitor.

Group of answer choices

True

False

Question 18

Shareholders have unlimited liability--that is, their liability is not limited to their investment in the company.

Group of answer choices

True

False

Question 19

Purchasers often require an ISO 9001 certification prior to buying a business in order to ensure that internal standards and controls are in place.

Group of answer choices

True

False

Question 20

The board of directors is elected by a majority vote of the company's shareholders and employees.

Group of answer choices

True

False

Question 21

Boards of directors are not allowed to delegate risk oversight responsibilities to a board committee.

Group of answer choices

True

False

Question 22

Internal audits are used in part to determine whether internal controls are working properly.

Group of answer choices

True

False

Question 23

Disaster planning is one way of enhancing organizational resilience.

Group of answer choices

True

False

Question 24

Compared with Governance, Risk Management, and Compliance (GRC), Enterprise Risk Management is more top-down and more focused on transparency and accountability.

Group of answer choices

True

False

Question 25

The European Union's Solvency II Directive requires hotels and restaurants to maintain minimum capital requirements.

Group of answer choices

True

False

Question 26

SWOT analysis and PESTLE analysis are used during the strategy formation stage to determine strategic objectives.

Group of answer choices

True

False

Question 27

A risk management professional should ensure that an organizational risk register includes only the most severe risks.

Group of answer choices

True

False

Question 28

Market risk, inflation risk, and liquidity risk are speculative risks associated with investments.

Group of answer choices

True

False

Question 29

External risks can be mitigated by using insurance.

Group of answer choices

True

False

Question 30

ISO 31000 has an very narrow definition of risk.

Group of answer choices

True

False

Question 31

Consistency, rigor, clarity, and measurability play little or no role in ERM.

Group of answer choices

True

False

Question 32

Risk appetite, risk tolerance, and risk assessment are components of strategic risk management.

Group of answer choices

True

False

Question 33

The separation of ownership (shareholders) and control (board and management) is of little relevance to corporate governance.

Group of answer choices

True

False

Question 34

Contracts, regulations, and litigation are all components of legal risk.

True

False

Question 35

Sentiment analysis is the process of determining the opinion or emotion behind a selection of text.

Group of answer choices

True

False

Question 36

A critical success factor is the same thing as a key performance indicator.

Group of answer choices

True

False

Question 37

The discounted cash flow model can be used to value the stock (i.e., the equity) of corporations.

Group of answer choices

True

False

Question 38

A corporation's optimal capital structure minimizes the amount of debt and maximizes the amount of equity.

Group of answer choices

True

False

Question 39

Liquidity risk refers to a company's risk of becoming insolvent.

Group of answer choices

True

False

Flag question: Question 40

Uncertainty is a characteristics of the VUCA paradigm.

Group of answer choices

True

False

Question 41

Risk-based auditing helps support an organization's internal control function by aligning audit resources with the areas that pose the greatest organizational risk.

Group of answer choices

True

False

Question 42

ERM focuses solely on managing strategic risk.

Group of answer choices

True

False

Question 43

Fraud reduction is one goal of ERM.

Group of answer choices

True

False

Question 44

Public corporations are required by law to put social responsibility before corporate profit.

Group of answer choices

True

False

Question 45

A corporation's board of directors is responsible for major managerial decisions and for protecting shareholder interests.

Group of answer choices

True

False

Question 46

Economic, sociological, and technological factors all play a role in PESTLE analysis.

Group of answer choices

True

False

Question 47

Diversification is a component of portfolio theory.

Group of answer choices

True

False

Question 48

An organization's risk strategy would normally take into account Environment, Health and Safety (EHS) exposures.

Group of answer choices

True

False

Question 49

Shareholder value maximization tends to promote efficiency, innovation, and growth.

Group of answer choices

True

False

Question 50

Risk appetite statements are used by ERM dietitians to communicate the risk of obesity.

Group of answer choices

True

False