Introduction to ERM
These questions cover the basic principles of ERM, key concepts and the framework for risk management within a company.
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Question 1 of 5
Which one of the following is defined as the maximum loss that could be suffered?Correct
Exposure is the maximum loss that could be suffered; downside risk refers to an assessment of risk that looks only at adverse events, whilst severity looks at how bad an adverse event would be.Incorrect
Question 2 of 5
Which one of the following statements about ERM frameworks is incorrect?Correct
Both quantifiable and unquantifiable risks should be allowed for in an ERM framework.Incorrect
Question 3 of 5
Which of these is (or are) a possible definition of risk?Correct
Risk can be quantifiable or unquantifiable, but there is always an element of uncertainty.Incorrect
Question 4 of 5
Which of these is (or are) a reason for using a consistent risk taxonomy?Correct
It is important that if abbreviations are used, they are employed in such a way that external parties can still understand risk definitions. This makes external verification of ERM frameworks easier.Incorrect
Question 5 of 5
Rearrange these elements of an ERM framework into the correct order:
Assess the context
Identifty the risks
Assess the risks
Decide on the extent to which risks should be managed
Take appropriate action
Review and report