CRM Principles of Risk Management Exam Latest Update 2024-2025 Questions and 100% Verified Correct Answers Guaranteed A+
Define Accounting. - CORRECT ANSWER: a process of recording and classifying
business and financial transactions and reporting them on an organization's financial statements
Define and list the four elements of Negligence (unintentional tort) - CORRECT
ANSWER: 1) duty owed
2) breach of that duty
3) causation
4) damage
Define Enterprise Risk Management (ERM). - CORRECT ANSWER: across functional
view of risks affecting all areas of the entire organization (embraces speculative risk)
Define Finance. - CORRECT ANSWER: a process of managing an organization's
assets, liabilities and cash flows to maximize shareholder (or stakeholder) wealth
Define Organizational Risk Culture (ORC). - CORRECT ANSWER: a set of
understandings, knowledge, beliefs, values and habits toward risk, that characterize a human group (organization) in search of a common purpose
Define risk ability. - CORRECT ANSWER: financial capacity to assuming risk
Define risk appetite - CORRECT ANSWER: willingness to accept or tolerate risk
Define Traditional Risk Management (TRM). - CORRECT ANSWER: a functional,
siloed, view of risk affecting one or more areas of the organization (focuses on pure risk)
Describe characteristics of Enterprise Risk Management (ERM) (5) - CORRECT
ANSWER: 1) risk has potential upside and downside
2) tied to strategic objectives 3) cross functional treatment of risk 4) uses subject matter experts and risk committees to identify risk and spreads accountability of risk 5) proactive/opportunistic
Describe characteristics of Traditional Risk Management (TRM) (5) - CORRECT
ANSWER: 1. manages downside risks 1 / 2
- oriented to cause-of-loss, tied to minimizing risk impact
- functional siloed treatement of risk
- risk ID and ownership with individual employee or department
- Reactive
Describe how to implement an effective Risk Management program. - CORRECT
ANSWER: 1) Communicate throughout Organization and with risk team.
2) Involve all levels and reinforce commitment to risk management principles
Describe the components of the Balance Sheet. - CORRECT ANSWER: 1) Current
Assets [cash/receivables/inventory] 2) Fixed Assets [buildings/investments] 3) Current Liabilities [owed in a year or less] 4) long term liabilities
Describe the components of the Income Statement. - CORRECT ANSWER: 1) Sales
2) Expenses 3) Cost of Goods Sold 4) Depreciations 5) Interest Expense 6) Taxes 7) Profitability Measures
Describe the components of the Statement of Cash Flows. - CORRECT ANSWER: 1)
Operating Activates 2) Investing Activities 3) Financing Activities 4) Other non-cash expenses/transactions
Describe the governing documents of a Risk Management program. - CORRECT
ANSWER: 1) Manual
2) Policy Statement
3) Mission Statement
Describe the purpose of the Balance Sheet. - CORRECT ANSWER: - a summary of
the organization's assets, liabilities and owner's equity as of a specific point in time
Describe the purpose of the Income Statement. - CORRECT ANSWER: summary of
the organization's financial performance for a specific period of time.
Describe the purpose of the Statement of Cash Flows. - CORRECT ANSWER: a report
summarizing the effects of cash on the operating, investing and financial activities of an organization for a specific period of time
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