GAQM ISO-31000-CLA ISO 31000 - Certified Lead Risk Manager Exam Practice Test

According to , page 17, a crisis management team (CMT) is “a group of senior managers who have been delegated authority by an organization’s executive leadership team to make decisions during a crisis”. A centralized decision making structure allows for faster and more coordinated responses in an emergency situation.

The day-to-day responsibility of a Chief Risk Officer within a large organisation is to ensure that all key risks are adequately managed and reported4. This involves overseeing the implementation of risk management policies, processes and systems across the organisation.

According to 3, page 6, one of the current trends in auditing, risk management and compliance is “moving from a back-office function providing lagging indicators about risk (e.g., audit findings) to a front-office function providing leading indicators about risk (e.g., key risk indicators)”.

Human element is often the biggest challenge in risk implementation. Human element involves overcoming resistance to change, engaging stakeholders, building trust and commitment, and fostering a positive risk culture.

Uncertainties may involve the process used to conduct the risk analysis and differing abilities among risk analysts. These are examples of factors that can affect the quality and reliability of risk assessment1.

According to 1, OCEG GRC model is “a framework for integrating governance, risk management, compliance and ethics/culture into a single capability”. It defines risk management as “the capability that enables an organization to understand how uncertainty affects its ability to achieve objectives” 2.

Communication with stakeholders, customers, and interested parties is an essential element for maintaining the relevance of enhanced risk management within the structure of a changing context3. Communication helps to establish trust, transparency, accountability, and feedback mechanisms for risk management.

Understanding the potential causes of risk events will primarily help an organisation to reduce the frequency of loss. This is because identifying and analysing the sources and drivers of risks can enable an organisation to implement preventive or mitigating measures.

According to , page 11, scenario based risk identification involves “creating different scenarios based on varying assumptions about how events might unfold”. This can help explore alternative ways to achieve an objective under different circumstances.

Control is not a set of systematic, deliberate, and actionable steps to manage risk, but rather a measure or action that modifies risk1. Process is a set of systematic, deliberate, and actionable steps to manage risk2. Process involves establishing context, identifying risks, analyzing risks, evaluating risks, and treating risks.

ISO 31000:2018 consists of risk management principles, framework, and process that have been adopted as a national risk management standard by more than 60 countries23. It provides guidelines on managing any type of risk faced by organizations.

According to 1, systemic risk is “the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy”. It is different from other types of risks that affect only specific parts or aspects of an organization 2.

Risk management is systematic, structured, and timely4. Systematic means that risk management follows a logical and consistent approach. Structured means that risk management has clear steps, roles, and responsibilities. Timely means that risk management provides information in time for decision making.

A fire occurring in a new manufacturing process line is an example of a pure risk, which is a situation that can only end in a loss12. For example, the fire could damage property, injure workers or disrupt operations.

 Risk treatment is the risk process step to manage, control, or remediate risk1. Risk treatment involves selecting and implementing options to modify or control risks.