BFF5902 Introduction to risk management 2 – Semester 2 2024Python

Java Python BFF5902

Introduction to risk management – Semester 2, 2024

1. A home-owner buys an insurance contract for the replacement cost of her house in the event that it is destroyed by fire. This is an example of which of the following categories of risk?

Select one:

a) Fundamental risk and static risk

b) Particular risk and pure risk

c) Dynamic risk and speculative risk

d) None of the above

2. Cash Flow at Risk is a quantitative analysis method that describes the level of financial consequence for a given likelihood.

Select one:

True

False

3. Which of the following is an external source of uncertainty?

Select one:

a) Organisational resistance to change

b) Theft of customer information due to cyber attack

c) Failure to comply with a law

d) Poor strategy that fails to anticipate competition adequately

4. A risk level scale comprising qualitative descriptors such as 'High', 'Medium' and 'Low' is an example of a ratio measurement scale.

Select one:

True

False

5. Which of the following statements is TRUE?

a) A fully effective control is defined as one where The residual risk is made equal to the intrinsic risk.

b) The inherent risk is low.

c) The risk has been reduced below the level that is considered As Low as Reasonably Practicable (ALARP).

d) The residual risk has been lowered to the level intended.

6. The Three Lines of Defence Model states that the second line management oversight functions are ultimately responsible for the organisation’s risk culture and maintaining a robust risk management framework.

Select one:

True

False

7. Risk capacity is defined as that level of risk that the Board of an organisation is willing to accept in pursuit of the organisation’s goals.

Select one:

True

False

8. Which of the following statements is TRUE?

According to AS ISO 31000:2018:

a) Risk is the effect of uncertainty on objectives.

b) Risk is the negative effect of uncertainty on objectives.

c) Risk is a condition in which there is a p BFF5902 Introduction to risk management 2 – Semester 2, 2024Python ossibility of an adverse deviation from a desired outcome that is expected or hoped for.

d) None of the above.

9. A worker avoids wearing protective clothing solely for the reason that nothing adverse has happened to them yet.

Which of the following theories best explains their behaviour?

a) Risk compensation theory.

b) Habituated action theory.

c) Protection motivation theory.

d) Social action theory.

10. When designing the risk matrix, which of the following is NOT consistent with a risk-averse organisation?

a) For the same consequence rating, risk levels remain the same or become more severe as the likelihood increases.

b) For the same likelihood rating, risk levels remain the same or become more severe as consequence rating becomes more severe

c) For the most severe consequence rating, the worst risk level rating is given regardless of likelihood rating.

d) For the same consequence rating, risk levels remain the same or become more severe as the likelihood decreases.

11. Which of the following is NOT an element of the risk criteria:

a) A statement stating which risks are prohibited.

b) A matrix describing how likelihood and consequences are combined to form. a risk level scale.

c) A scale describing how consequence is measured.

d) A scale describing how likelihood is defined.

12. When people are upset, angry or fearful they are more likely to give weight to negative information and less weight to positive information.

Which of the following theories of risk communication BEST describes this effect?

a) Negative dominance.

b) Trust determination.

c) Mental noise.

d) Risk perception.

13. Risk management is the systematic and coordinated activities to identify, assess and treat risks faced by an organisation in order to improve the likelihood of it achieving its objectives

Select one:

True

False

14. Which of the following statements BEST describes a risk event that is rare, has an extremely large consequence and is unpredicted but rationalised after the event?

a) Black Swan.

b) Dragon King.

c) Unprecedented.

d) Catastrophic.

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