Topic 1 RM part 1

What is the primary focus of corporate governance?

• Maximizing profits

• Achieving objectives

• Ensuring compliance

• Minimizing risks

Which term refers to the causes of losses?

• Hazard

• Risk

• Chance

• Peril

What is the definition of risk in the context of Islamic Financial Institutions (IFIs)?

• Possibility of market stability

• Possibility of losing money

• Possibility of profit

• Possibility of gaining assets

What does downside risk refer to?

• Risk of better than expected outcomes

• Risk of worse than expected outcomes

• Risk of market stability

• Risk of no change

What is the importance of risk management (RM) in organizations?

• To optimize risk-reward equation

• To increase operational costs

• To eliminate all risks

• To avoid compliance

Which of the following is a moral hazard?

• Market volatility

• Intentionally committing fraud

• Defective wiring in a building

• Natural disasters

What does the term 'hazard' refer to in risk management?

• An uncertain event

• A favorable outcome

• A cause of loss

• A condition that increases the possibility of loss

What is the relationship between risk and return?

• Higher risk leads to lower returns

• Returns are guaranteed regardless of risk

• Higher risk leads to higher returns

• Risk has no impact on returns

What is the concept of 'sharia screening' in Islamic finance?

• Evaluating compliance with Shariah principles

• Assessing financial performance

• Analyzing investment returns

• Determining market risks

What does the term 'mukhāṭarah' mean in Islamic finance?

• Financial stability

• Possibility of unexpected outcomes

• Investment diversification

• Risk assessment