TOPIC 7 QUESTIONS AND ANSWERS

True or false

1. Risk Apetite is the level of risk that the business accepts. True

2. Event Identification is risk identification. True

3. Inherent Risk is the risk that remains after the management respond to the risk. False

4. Likelihood is the impact or effect of the even or risk. False

5. Retrospective risks are risks that occur in the past. True

6. Leading telecommunication companies in the Philippines believe that enterprise risk

management practices are vital to sustaining profitability and resiliency. True

7. Enterprise risk management is a stand-alone discipline. False

8. Risk responses also involve assessing the effectiveness of the current controls. True

9. The effectiveness of the ERM framework has to be monitored and reviewed constantly. True

10. Communication and information must be done at the last step of the process. False

Identification:

1. It reflects the philosophy of the whole company. Internal Environment

2. This is measured according to the magnitude of loss. Consequence

3. Also known as an absolute risk. Pure Risk

4. Involves examining possible treatment options to determine the most appropriate action to
take to manage a risk. Risk Response

5. This involves considering the risk's overall risk level. Risk Evaluation

6. Process, effected by an entity's Board of directors, management and other personnel, applied
in strategy and across the enterprise, designed to IDENTIFY potential events that may affect the
entity and manage risk to be within its risk appetite. Enterpise Risk Management

7. Objective category which are aligned with the missions of the organization. Strategic
Objectives
8. A process in ERM which consists of five steps such as establishing the internal, external and
risk management as well as the development of risk criteria and risk structure. Establish the
context

9. Risk that are tricky to identify. Prospective risks

10. Provides reasonable assurance regarding the achievement of entity’s objectives. Enterpise
Risk Management

Multiple choices

1. The following are part of the components of the ERM Cube Framework. EXCEPT

a. Object Setting

b. Risk Response

c. Risk Failure

d. Internal Environment

2. The category of objective that is critical to the success of the organization

a. Strategic objectives

b. Operational objectives

c. Compliance objectives

d. Reporting objectives

3. These are risks that are tricky to identify because it does not yet occur.

a. Inherent Risk

b. Prospective Risk

c. Retrospective Risk

d. Residual Risk
4. In analyzing the risk, it can be expressed mathematically, which of the following is the
equation?

a. Risk= likelihood+conseqence

b. Risk=consequence-likelihood

c. Risk=consequence* likelihood

d. none of the above

5. The process of ERM which is design to obtain risk information.

a. Communicate and consult

b. Establish the context

c. Evaluate the risk

d. Monitor and review

6. Which of the following is not one of the internal environment activities?

a. Risk Appetite

b. Risk Tolerance

c. Risk management capabilities

d. Risk responsibilities

7. This refers to the possibility that the company may experience loss in terms of profit.

a. Business Risk

b. Strategic Risk

c. Risk

d. Opportunity Loss

8. The following are objectives of ERM framework EXCEPT:

a. Provide a consistent risk assessment criterion

b. Support a more effective decision making

c. Provide a systematic approach to the early identification anf management of risk

d. None of the above

9. The following are benefits of ERM framework EXCEPT:

a. Foster a high standard of accountability at all levels of the organization

b. Support a more effective decision making

c. Provide a systematic approach to the early identification anf management of risk

d. None of the above

10. Which risk treatment involves changing the business process or objective to avoid risk?

a. Take

b. Terminate

c. Transfer

d. Treat