General ERM Quiz

A business model is a set of assumptions about the _____ .

• financial stability of an organization

• organizational structure of a business

• products and services’ past performance

• way an organization creates value

Answer explanation

The business model represents the value an organization creates.

What two analytical tools are particularly useful in analyzing the business model?

• Key performance indicators and total cost of risk

• Key risk indicators and gap analysis

• Pareto analysis and root cause analysis

• Value chain analysis and benchmarking

Answer explanation

The risk management professional should utilize appropriate analytical tools for analyzing the business model.

Risk management professionals conduct supply-chain analyses to identify _____ .

• contingent business interruption coverage

• customer technology needs

• international regulatory requirements

• potential vulnerabilities to the organization

Answer explanation

The vulnerability of the supply-chain helps determine the organization’s ability to meet performance objectives.

Which activity does the risk management professional perform immediately after obtaining internal and external information about the organization?

• analyze the information

• organize the information

• prioritize the information

• report the information

Answer explanation

To properly perform due diligence, the risk management professional needs to know the order of processing the information. Information must be organized before it can be analyzed, prioritized, or reported.

Which risk identification and analysis technique should a risk management professional use in order to gather information from multiple departments in a brainstorming session that helps to identify shared risks within an organization?

• checklists

• flowcharts

• workshops

• questionnaires

Answer explanation

Workshops have an advantage in that they have a facilitator that can help to guide the discussion and identify information in this interactive format. Checklists, flowcharts, and questionnaires are less able to identify shared risks between departments as they are completed in a silo approach.

When analyzing an organization’s value chain, which of the following would be considered a primary activity?

• technological development

• human resources management

• infrastructure management

• outbound logistics

Answer explanation

Porter’s value chain model considers the following to be primary activities: Inbound logistics, Operations, Outbound Logistics, Marketing and Sales, and Service.

The organization’s resources and internal support are _____ the risk management strategy.

• adjustable to match

• inputs in the development of

• metrics used to measure the value of

• outcomes of the development of

Answer explanation

The appropriate risk management strategy aligns with the organization’s internal resources and support.

When defining the success measures for the organization’s risk strategy, the risk management professional will include which of the following steps?

• a review of the goals and objectives of the risk strategy

• a selection of appropriate media for communicating the risk strategy

• an analysis of the organization’s total cost of insurable risk

• the development of timelines for implementing the risk strategy

Answer explanation

Success measures can only be defined if one understands the strategy’s goals and objectives.

Which of the following BEST guides an organization’s risk management decision-making process?

• risk financing opportunities

• risk retention levels

• risk strategy approach

• risk treatment options

Answer explanation

The design of the risk management framework should facilitate the integration of the risk management process into decision-making and the overall management of the organization.

An effective risk communication strategy requires the selection of appropriate _____ .

• coaches

• data points

• media channels

• metrics

Answer explanation

Communicating with stakeholders is done via one of two channels, depending on whether the audience is internal

or external.