Question 33

All of the following are valid reasons for expansion of international business by U.S. multinational corporations, except to:

A. secure new sources for raw materials.

B. protect their domestic market from competition from foreign manufacturers.

C. minimize their costs of production.

D. find additional areas where their products can be successfully marketed.

Question 34

Risks that relate to losses from inadequate or failed internal processes, people, and systems are commonly called:

A. Hazard risks.

B. Financial risks.

C. Operational risks.

D. Strategic risks.

Question 35

A toothbrush manufacturer has noticed a shift of customer preferences in its growing Asian sales market toward electronic battery-operated toothbrushes from manual toothbrushes. This shifting of customer tastes best represents what type of risk to the toothbrush manufacturer?

A. Strategic risk

B. Operational risk

C. Financial risk

D. Business risk

Question 36 Which of the following statements is correct?

A. Risk identification involves brainstorming to list the risks facing an organization.

B. Risk mapping involves brainstorming to list the risks facing an organization.

C. Risk ranking involves brainstorming to list the risks facing an organization.

D. Risks should only be assessed quantitatively.

Question 37

Which of the following is not a way to reduce operational risk?

A. Buying and installing generators at all company facilities

B. Training employees on laws concerning the proper handling of private employee information

C. Conducting random audits of petty cash accounts

D. Having multiple people use one cash register at a department store

Question 38

Which of the following is an example of a strategic risk?

A. The CEO of a company dying unexpectedly

B. Missing an interest payment on a bond issue

C. A product becoming obsolete when a competitor introduces a new product

D. Hiring incompetent workers

Question 39

Which of the following is an example of an operational risk?

A. A flood damaging a production facility

B. Interest payments increasing on variable-rate debt when interest rates increase

C. A defense contractor losing business when a new political party wins a presidential election

D. An employee accidentally opening an e-mail attachment that results in a virus infecting the company's IT system

Question 40

Which of the following is not true regarding operational risk?

A. Operational risk can be caused by poor human resource practices.

B. Operational risk can be caused by a lack of appropriate insurance coverage.

C. Operational risk can be caused by poor internal controls.

D. Operational risk can be caused by poor product design decisions.