ERM Quiz 2

Which of the following best defines strategic risk?

• Risks related to daily operations

• Risks arising from changes in strategy or external environments

• Risks related to IT failures

• Risks caused by employee misconduct

Which tool is commonly used to identify and assess strategic risks?

• SWOT analysis

• Firewall monitoring

• Balance sheet review

• Operational audits

What is a common characteristic of strategic risks?

• They often involve external and uncontrollable factors.

• They are usually predictable.

• They have a low potential for financial impact.

• They are always short-term in nature.

A common consequence of poor leadership risk management is:

• Increased market share

• Improved organizational culture

• Reduced operational costs

• Employee disengagement

What is a proactive way to manage leadership risk?

• Conducting annual cybersecurity audits

• Implementing leadership training programs

• Outsourcing key decisions to consultants

• Minimizing the number of leadership roles

A transformational leadership style helps manage leadership risk by:

• Focusing solely on short-term gains.

• Relying heavily on standard procedures.

• Reducing employee involvement in decision-making.

• Encouraging innovation and adaptability.

Subculture risk is most likely to arise in:

• Organizations with decentralized structures

• Homogeneous teams

• Businesses with strong central leadership

• Startups with fewer than 10 employees

Subculture risk management focuses on:

• Aligning diverse teams under a unified organizational vision

• Replacing subcultures with a single dominant culture

• Eliminating all interdepartmental interaction

• Suppressing dissenting opinions within teams

During the growth stage of a product life cycle, a common risk is:

• Oversaturation of the market

• Lack of demand for the product

• Poor quality control

• Loss of brand recognition

How can life cycle risks be managed effectively?

• By focusing on a single stage of the product life cycle

• By identifying risks specific to each stage of the product or project

• By avoiding innovation in later stages

• By relying on competitors' strategies