Question

9. Impact of occurrence of a risk depends upon?

1. design and operational effectiveness of controls.
2. directive and preventive controls.
3. detective and corrective controls.
4. Stress tests.
   

The correct answer is ___

10. Role of controls in mitigating risk depends upon:

1. design and operational effectiveness of controls.
2. directive and preventive controls.
3. detective and corrective controls.
4. scenario analysis.

The correct answer is ___

11. Which of the following would be operational risk manager’s MAJOR concern when a firm introduces major layoffs during a recession?

1. Lack of segregation of duties to mitigate risk
2. Reduced revenue to support key employee retention
3. Problem attracting qualified risk professionals
4. Laid off employees being given severance packages

The correct answer is A

12. Which of the following is IMPROPER corporate governance as related to risk management?

1. Board delegating risk management ownership to management
2. Management proactively seeking risk ownership from the board
3. Business unit managers delegating risk management to operations managers
4. Operations managers doing strategic risk analysis on their own

The correct answer is ___

Answer 1

9.A) the design and operational effectiveness of controls because all controls i.e corrective, preventive or detective all see a situation from different tangent to resolve it. Thus, until and unless these controls are not designed properly and checked for there effectiveness, their purpose is not served.

10.D. The mitigation of risks will only be possible when the scenario analysis is undertaken for the identification of risks and efficient controls are being used for managing the risk. Thus, scenario analysis is the answer.

11.B. Problem retaining key employees due to reduced revenue is a major operational risk since it affects the efficiency of the firm to sustain in the situation of recession and to probably perform better, leaving an organisation crippled.

12. D) Operational managers doing risk analysis on their own. This is an ineffective exercise from the fact that strategic planning and corporate governance practices for analysing risk and mitigating risk must be communicated by the top management to the operations manager in order to bring in unity of purpose against a problem.