Practice Test

The role of the Risk Owner is to develop an action plan for risk management.

  • True
  • False

Answer: True

Explanation: A risk owner manages the risk, takes responsibility for its occurrence, and develops an action plan that includes risk management strategies.

A Risk Management Plan only includes assessing risks and does not include any contingency plans.

  • True
  • False

Answer: False

Explanation: A Risk Management Plan not only includes assessing the potential risks but also devising contingency plans to deal with them when they arise.

Which of the following statements best describes a Risk Action Owner’s responsibility?

  • Implement risk responses
  • Identify risks
  • Document risks
  • All of the above

Answer: Implement risk responses

Explanation: The Risk Action Owner is responsible for executing the risk responses that are adopted to tackle a particular risk.

A Risk Analyst holds the highest responsibility in risk management of an organization.

  • True
  • False

Answer: False

Explanation: A Risk Analyst role is important in risk assessment phase of risk management, however, the highest responsibility is usually held by the Chief Risk Officer or Risk Manager.

The role of Risk Committee includes all of the following except

  • Establish risk management policies
  • Oversee risk management activities
  • Monitor risk events to ensure timely response
  • Designing the company’s products or services

Answer: Designing the company’s products or services

Explanation: The Risk Committee does not deal with product or service design directly but majorly involves risk management activities.

The role of the Chief Risk Officer (CRO) is to ensure that the organization adheres to its risk appetite.

  • True
  • False

Answer: True

Explanation: Among various responsibilities, a Chief Risk Officer ensures that the organization operates within its risk appetite to prevent potential lost opportunities or adverse impacts.

In project management, the project manager is solely responsible for all risk related issues.

  • True
  • False

Answer: False

Explanation: Even though project managers play a key role in managing risks, the responsibility for risk management is spread across various roles such as risk owners, risk action owners, risk committee, etc.

The Risk Management Team in an organization is responsible only for identifying risks and not for formulating responses.

  • True
  • False

Answer: False

Explanation: The Risk Management Team is responsible for both identifying risk and also for formulating responses.

The Chief Risk Officer (CRO) is responsible for reviewing and enforcing compliance with laws and regulations.

  • True
  • False

Answer: True

Explanation: The CRO ensures that business operations are conducted within the framework of established laws and regulations.

The Risk Committee is not involved in setting the company’s risk tolerance and appetite.

  • True
  • False

Answer: False

Explanation: The Risk Committee plays an active role in defining the risk tolerance and appetite, which describes the amount of risk the company is willing to withstand in pursuit of its objectives.

The Risk Action Owner’s responsibility is limited only to creating risk responses.

  • True
  • False

Answer: False

Explanation: The Risk Action Owner not only formulates but also implements the risk responses.

Auditors do not have any role in risk management.

  • True
  • False

Answer: False

Explanation: Auditors play a crucial role by conducting independent assessments to ensure all risks are being addressed and risk management procedures are followed.

Risk Managers link each identified risk with a suitable risk owner.

  • True
  • False

Answer: True

Explanation: Risk Managers allocate each identified risk to risk owners who then devise risk strategies and action plans to tackle the risk.

Compliance Officers play no role in organizational risk management.

  • True
  • False

Answer: False

Explanation: Compliance Officers ensure that the organization is adhering to laws, regulations and standards, thereby playing an important part in organizational risk management.

Who is responsible for carrying out risk responses?

  • Risk Action Owner
  • Risk Analyst
  • Risk Manager
  • Chief Risk Officer

Answer: Risk Action Owner

Explanation: The Risk Action Owner is the key person responsible for implementing the risk responses once they are devised.

Interview Questions

What is organizational risk?

Organizational risk refers to the uncertainties and potential events that could negatively impact an organization’s processes, objectives, outcomes, or stakeholders.

Who is typically responsible for risk identification in an organization?

The responsibility for risk identification typically falls on the project managers, team leaders, and stakeholders. However, risk identification should be a continual process involving all members of an organization.

What role does the board of directors play in risk management?

The board of directors is responsible for ensuring the organization has an effective risk management framework in place, setting risk appetite and tolerance levels, and making strategic decisions based on risk evaluations.

What is the role of a Risk Management Officer (RMO)?

The RMO is responsible for overseeing the risk management process, including risk identification, assessment, and response planning. The RMO also ensures the integration of risk management practices into the organization’s overall strategy and operations.

What are some of the responsibilities of the Risk Management team?

The Risk Management team is responsible for the day-to-day activities of managing risks, including continuously identifying and assessing risks, developing and implementing risk responses, monitoring and reporting on risks, and improving risk management processes.

What is the role of stakeholders in risk management?

Stakeholders play a key role in risk management as they can help in identifying risks, they are often directly impacted by risks, and they can play a part in responding to risks. Stakeholders also have a role in determining risk appetite and tolerance levels.

What is a risk owner’s role in an organization?

A risk owner is responsible for managing a particular risk. This includes monitoring the risk, implementing the risk response when necessary, and communicating the status of the risk to other relevant parties.

How does an organization’s culture impact its risk management practices?

An organization’s culture influences how risks are perceived, how openly risks are discussed, and how proactively risks are managed. A strong risk culture promotes transparency, accountability, and continuous improvement in risk management.

What role does the audit committee play in risk management?

An audit committee typically oversees the effectiveness of the risk management process, often through reviewing risk reports, examining the management of key risks, and ensuring risks are being adequately addressed and reported on.

What is the responsibility of internal audit in risk management?

The internal audit function provides an independent assessment of the risk management process, ensuring that it is working effectively, and making recommendations for improvements as needed.

What is executive management’s role in risk management?

Executive management is responsible for implementing the risk management framework set by the board, incorporating risk management into strategic planning and decision-making, assigning risk owners, and ensuring the organization’s risk appetite and tolerance are adhered to.

Leave a Reply

Your email address will not be published. Required fields are marked *