Which of the following is the BEST way to identify changes in the risk profile of an organization?
Correct Answer: A
The best way to identify changes in the risk profile of an organization is to monitor key risk indicators (KRIs), which are metrics that provide information on the level of exposure to a given operational risk1. KRIs can help to monitor the changes in risk levels over time, identify emerging risks, and trigger risk response actions when the risk exceeds the acceptable thresholds2. KRIs can also help to align the risk management strategy with the business objectives and context. The other options are not the best ways to identify changes in the risk profile of an organization, as they do not provide the same level of insight and guidance as KRIs. Monitoring key performance indicators (KPIs) may show the results or outcomes of the business processes, but not the risks or uncertainties that affect them. Interviewing the risk owner may provide some subjective or qualitative information on the risk perception or attitude, but not the objective or quantitative data on the risk exposure or impact. Conducting a gap analysis may show the difference between the current and desired state of the organization, but not the causes or sources of the risk. References = Key Risk Indicators; Key Risk Indicators: A Practical Guide
Question 652
Which of the following BEST mitigates ethical risk?
Correct Answer: A
Ethics committees are typically responsible for developing, implementing, and overseeing an organization's ethical guidelines and policies. They play a crucial role in mitigating ethical risk by ensuring that the organization's operations align with its ethical standards123. References 1What Is Ethically Informed Risk Management? - Journal of Ethics 2Five Ways to Reduce Ethics and Compliance Risk - Free Ethics Toolkit 35 Ways to Manage Ethical Risks - ClearRisk
Question 653
Which of the following approaches would BEST help to identify relevant risk scenarios?
Correct Answer: D
Question 654
You are the project manager of a project in Bluewell Inc. You and your project team have identified several project risks, completed risk analysis, and are planning to apply most appropriate risk responses. Which of the following tools would you use to choose the appropriate risk response?
Correct Answer: C
Section: Volume A Explanation: Decision tree analysis is a risk analysis tool that can help the project manager in determining the best risk response. The tool can be used to measure probability, impact, and risk exposure and how the selected risk response can affect the probability and/or impact of the selected risk event. It helps to form a balanced image of the risks and opportunities connected with each possible course of action. This makes them mostly useful for choosing between different strategies, projects, or investment opportunities particularly when the resources are limited. A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. Incorrect Answers: A: Project network diagrams help the project manager and stakeholders visualize the flow of the project work, but they are not used as a part of risk response planning. B: Cause-and-effect analysis is used for exposing risk factors and not an effective one in risk response planning. This analysis involves the use of predictive or diagnostic analytical tool for exploring the root causes or factors that contribute to positive or negative effects or outcomes. D: Delphi technique is used for risk analysis, i.e., for identifying the most probable risks. Delphi is a group of experts who used to rate independently the business risk of an organization. Each expert analyzes the risk independently and then prioritizes the risk, and the result is combined into a consensus.
Question 655
Which of the following is a key component of strong internal control environment?
Correct Answer: B
is incorrect. Manual controls usually not form strong internal control environment. By not automating SOD controls, there is, potentially, the issue of these controls becoming a barrier in serving the customer. As manual authorizations are often time consuming and require another step in any business process, this takes time away from serving the customer. Automated compliance solutions aim to provide enterprises with timely and efficient internal controls that do not disrupt their normal business process. Answer:A is incorrect. An RMIS can be a very effective tool in monitoring all risk factors that impact the enterprise. The danger is that many important classes of risk may be omitted from consideration by the system. hence it doesn't ensure strong internal control environment.