Sample Questions and Answers
What is the first step in the risk management process?
A) Risk control
B) Risk identification
C) Risk assessment
D) Risk treatment
Answer: B
Which of the following is considered a risk mitigation strategy?
A) Avoiding the risk entirely
B) Transferring the risk to a third party
C) Reducing the likelihood of the risk occurring
D) All of the above
Answer: D
Which of the following is the correct definition of “risk” in risk management?
A) The potential for negative financial impact
B) The uncertainty about the outcome of a process
C) The chance of loss or injury
D) All of the above
Answer: D
What is the purpose of a risk assessment in the risk management process?
A) To determine the financial impact of a risk
B) To evaluate the likelihood and impact of identified risks
C) To create contingency plans for risks
D) To communicate risks to stakeholders
Answer: B
Which technique is used to prioritize risks?
A) SWOT analysis
B) Risk matrix
C) Decision tree analysis
D) Pareto analysis
Answer: B
What is risk avoidance?
A) Accepting the consequences of the risk
B) Taking steps to prevent the risk from occurring
C) Transferring the risk to another party
D) Ignoring the risk completely
Answer: B
Which of the following is NOT a common method for assessing risk?
A) Qualitative analysis
B) Quantitative analysis
C) Regulatory compliance
D) Probability impact matrix
Answer: C
In the risk management process, what does risk control aim to do?
A) Eliminate the risk entirely
B) Minimize the potential negative impact of the risk
C) Identify new risks
D) Allocate resources to the most critical risks
Answer: B
What does “risk treatment” involve?
A) Identifying risks
B) Planning how to manage and respond to identified risks
C) Assessing the potential impact of risks
D) Monitoring the effectiveness of risk responses
Answer: B
What is a “risk register”?
A) A document listing identified risks, their potential impacts, and response strategies
B) A tool for assessing the likelihood of risks
C) A plan for transferring risk to an insurance company
D) A report for the board of directors
Answer: A
What is the role of risk communication in the risk management process?
A) To identify and assess new risks
B) To provide stakeholders with information about identified risks and responses
C) To monitor risks on a continuous basis
D) To implement risk mitigation strategies
Answer: B
Which of the following is a characteristic of a high-impact, low-likelihood risk?
A) The risk should be avoided
B) The risk should be accepted with monitoring
C) The risk should be mitigated aggressively
D) The risk should be transferred
Answer: B
What is the purpose of conducting a risk audit?
A) To identify new risks that may arise
B) To evaluate the effectiveness of risk management actions and strategies
C) To eliminate risks from the risk register
D) To report risks to external stakeholders
Answer: B
What is the main goal of business continuity planning in risk management?
A) To transfer risks to third parties
B) To minimize the financial impact of risks
C) To ensure an organization can continue operating during a crisis
D) To assess the probability of risks occurring
Answer: C
What is “risk retention”?
A) Ignoring the risk and not taking any action
B) Transferring the risk to a third party
C) Accepting the risk and its consequences
D) Avoiding the risk completely
Answer: C
What type of risk analysis focuses on quantifying risks with numerical data?
A) Qualitative analysis
B) Quantitative analysis
C) Risk assessment matrix
D) Expert judgment
Answer: B
What is a “contingency plan” in risk management?
A) A document detailing potential risks
B) A backup plan for mitigating or responding to risks that may arise
C) A plan for avoiding risks entirely
D) A legal document transferring risks
Answer: B
Which of the following describes the “residual risk”?
A) The risk remaining after mitigation actions have been taken
B) The probability of risk occurring
C) The financial impact of a risk
D) The total cost of risk management
Answer: A
What is “risk transference”?
A) Preventing the risk from occurring
B) Transferring the financial responsibility of the risk to another party
C) Ignoring the risk
D) Evaluating the likelihood and impact of the risk
Answer: B
What is the final step in the risk management process?
A) Risk assessment
B) Risk identification
C) Risk treatment
D) Monitoring and reviewing
Answer: D
What is an example of a risk transfer strategy?
A) Purchasing insurance
B) Ignoring the risk
C) Reducing the likelihood of the risk
D) Implementing new processes
Answer: A
What is the purpose of risk monitoring?
A) To track and assess the effectiveness of risk management actions
B) To identify new risks
C) To evaluate the financial impact of risks
D) To communicate with stakeholders
Answer: A
What does “impact” in risk management refer to?
A) The likelihood that a risk will occur
B) The potential consequences or effects if the risk occurs
C) The number of risks an organization faces
D) The amount of resources allocated to manage the risk
Answer: B
Which of the following best describes the concept of “risk appetite”?
A) The maximum amount of risk an organization is willing to take
B) The probability of a risk occurring
C) The total impact of a risk on the organization
D) The strategy used to avoid risk
Answer: A
What is a “risk matrix” used for?
A) Identifying new risks
B) Evaluating the potential consequences of risks
C) Mapping risks based on their likelihood and impact
D) Transferring risks to third parties
Answer: C
What does the process of “risk identification” involve?
A) Determining how to respond to a risk
B) Recognizing potential risks that could affect objectives
C) Quantifying the impact of a risk
D) Developing contingency plans
Answer: B
What is an example of a risk avoidance strategy?
A) Implementing additional safety protocols
B) Purchasing insurance
C) Closing down a project that presents a high risk
D) Sharing the risk with another organization
Answer: C
In risk management, what does the term “tolerable risk” mean?
A) The level of risk that is acceptable to the organization
B) The risk that is fully managed
C) The highest level of risk an organization can face
D) The risk that is transferred to another party
Answer: A
Which type of risk analysis considers both the probability and the impact of risks?
A) Qualitative risk analysis
B) Quantitative risk analysis
C) Risk response planning
D) Risk prioritization
Answer: A
Why is it important to communicate risk to stakeholders?
A) To inform them about potential financial losses
B) To ensure that everyone is aware of the potential impacts and management strategies
C) To reduce the likelihood of risks occurring
D) To allocate resources for risk management
Answer: B
31. What is the main goal of risk management in an organization?
A) To eliminate all risks
B) To identify potential risks
C) To minimize or control the impact of risks
D) To increase the likelihood of a risk occurring
Answer: C
32. What type of risk response involves spreading the risk across multiple entities or systems?
A) Risk transfer
B) Risk diversification
C) Risk reduction
D) Risk retention
Answer: B
33. What is the purpose of creating a risk management policy?
A) To define the processes for identifying and assessing risks
B) To prevent all risks from occurring
C) To allocate resources to the risk management team
D) To communicate risks to external stakeholders
Answer: A
34. Which of the following best describes a “dynamic risk”?
A) A risk that remains constant over time
B) A risk that changes due to evolving conditions
C) A risk that has already occurred
D) A risk that can be easily eliminated
Answer: B
35. What does the term “acceptable risk” refer to?
A) The amount of risk that is deemed necessary to achieve organizational goals
B) The risk that cannot be transferred
C) The risk that is immediately harmful to the organization
D) The total risk the organization faces
Answer: A
36. In which stage of the risk management process do organizations develop risk treatment strategies?
A) Risk assessment
B) Risk identification
C) Risk treatment
D) Risk monitoring
Answer: C
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