11 Risk Classification Systems

What do risk classification systems help organizations identify and manage?

• All of the above

• Tactical risks

• Operational risks

• Financial risks

According to the text, what does the FIRM risk scorecard provide?

What are the categories of risks in the FIRM risk scorecard?

• Hazard, Control, Opportunity, Compliance

• Financial, Infrastructure, Reputational, Marketplace

• Political, Economic, Sociological, Technological

• Operational, Tactical, Strategic, Compliance

What is the purpose of the PESTLE risk classification system?

• To classify operational risks

• To assess compliance risks

• To analyze financial risks

• To identify external risks

What is the main advantage of using the PESTLE risk classification system?

• Facilitates an understanding of the wider business environment

• Over-simplifies the amount of data used for decisions

• Requires different people to be involved with different perspectives

• Difficult to anticipate developments that may affect an organization in the future

What are the components represented in the bow tie illustration of risk management?

• Political, Economic, Sociological, Technological

• People, Premises, Processes, Products

• Hazard, Control, Opportunity, Compliance

• Financial, Infrastructure, Reputational, Marketplace

What is the purpose of classifying risks according to short, medium, and long-term categories?

• To identify risks as related to operations, tactics, and strategy

• To assess financial risks

• To analyze external risks

• To classify compliance risks

What does the FIRM risk scorecard classify as internal to the organization?

• Hazard and Control risks

• Political and Economic risks

• Financial and Infrastructure risks

• Reputational and Marketplace risks

What is the main advantage of having a risk classification system according to the British Standard?

• Helps identify actions to avoid or minimize the impact of threats

• Over-simplifies the amount of data used for decisions

• Requires different people to be involved with different perspectives

• Can be based on assumptions that subsequently prove to be unfounded

What is the purpose of combining the FIRM risk scorecard and classifying risks as hazard, control, and opportunity risks?

• To analyze external risks

• To assess financial risks

• To identify all possible significant risks

• To classify compliance risks