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Question 41

What is the impact of risk correlation in risk management?

a) It reduces the number of risks
b) It helps understand how risks are related and their potential to amplify one another
c) It eliminates all risks
d) It avoids focusing on external risks

Correct Answer: b) It helps understand how risks are related and their potential to amplify one another

Explanation: Risk correlation identifies how different risks are connected and can influence each other, which helps in creating more effective mitigation strategies.

Question 42

How does a key risk indicator (KRI) assist in risk management?

a) It predicts financial profits
b) It provides early warning signs of potential risks
c) It eliminates all risks
d) It increases the complexity of risk management

Correct Answer: b) It provides early warning signs of potential risks

Explanation: KRIs are used to monitor risks and provide early alerts about changes that could affect the organization.

Question 43

What is a residual risk in risk management?

a) The risk that remains after all risk mitigation measures have been applied
b) A risk that has been fully eliminated
c) A risk that cannot be identified
d) A financial risk only

Correct Answer: a) The risk that remains after all risk mitigation measures have been applied

Explanation: Residual risk is the amount of risk that remains even after all efforts have been made to mitigate it.

Question 44

What is the primary focus of risk governance?

a) To eliminate all risks
b) To ensure that risk management is integrated into the overall governance framework of the organization
c) To focus only on financial risks
d) To increase the number of risks identified

Correct Answer: b) To ensure that risk management is integrated into the overall governance framework of the organization

Explanation: Risk governance involves embedding risk management into the organization's broader governance structures, ensuring that it is aligned with strategic goals.

Question 45

How can scenario planning help in enterprise risk management?

a) By reducing financial performance
b) By preparing for a range of potential future events and outcomes
c) By eliminating all risks
d) By focusing only on day-to-day operations

Correct Answer: b) By preparing for a range of potential future events and outcomes

Explanation: Scenario planning helps organizations anticipate different future risks and prepare responses for various possible outcomes.

Question 46

What is a systemic risk?

a) A risk that affects only one department
b) A risk that can cause widespread disruption across multiple sectors or the entire economy
c) A risk that is easily controlled
d) A risk that only affects technology

Correct Answer: b) A risk that can cause widespread disruption across multiple sectors or the entire economy

Explanation: Systemic risks can trigger a chain reaction, affecting multiple industries or even the entire economy.

Question 47

What is the goal of risk maturity models in enterprise risk management?

a) To eliminate all risks
b) To assess the development and effectiveness of an organization’s risk management practices
c) To increase financial performance
d) To focus on external risks only

Correct Answer: b) To assess the development and effectiveness of an organization’s risk management practices

Explanation: Risk maturity models help organizations evaluate the sophistication and effectiveness of their risk management processes.

Question 48

What is an emerging risk in enterprise risk management?

a) A risk that is well-known and well-managed
b) A new or evolving risk that may not be fully understood or recognized yet
c) A financial risk that is easily controlled
d) A risk that only affects one part of the organization

Correct Answer: b) A new or evolving risk that may not be fully understood or recognized yet

Explanation: Emerging risks are new, often unpredictable risks that may not have been fully identified or understood.

Question 49

What role do financial controls play in risk management?

a) To eliminate all risks
b) To ensure that financial risks are identified, monitored, and managed effectively
c) To increase financial profits
d) To avoid documenting risks

Correct Answer: b) To ensure that financial risks are identified, monitored, and managed effectively

Explanation: Financial controls help organizations manage financial risks by monitoring and controlling financial processes and transactions.

Question 50

What is a leading risk indicator?

a) A measure of past risk events
b) An indicator that provides early signals of potential future risks
c) A financial performance metric
d) A measure of risks that have already occurred

Correct Answer: b) An indicator that provides early signals of potential future risks

Explanation: Leading risk indicators provide early warnings about potential risks, allowing organizations to take preventive measures.

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