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NEW QUESTION # 61
Which of the following significant risks of reporting are outside the risk appetite of the organization and can impact compliance, which may also be reportable to regulatory agencies? (Choose two)
- A. Internal
- B. Dynamic
- C. External
- D. Vision
- E. Functional
Answer: A,C
Explanation:
Explanation
External and internal risks are significant risks of reporting that are outside the risk appetite of the organization and can impact compliance, which may also be reportable to regulatory agencies1. These risks may arise from external factors such as market changes, natural disasters, or cyberattacks, or internal factors such as human errors, fraud, or system failures.
NEW QUESTION # 62
A risk management professional advises management on the status of key risks by
- A. providing insights into the changing characteristics of a risk.
- B. summarizing internal audit reports.
- C. annually identifying the inventory of risks.
- D. providing information about competitors' risk management plan.
Answer: A
Explanation:
Explanation
A risk management professional advises management on the status of key risks by providing insights into the changing characteristics of a risk3. This helps to monitor and review the effectiveness of risk management activities and communicate any changes in risk levels or priorities.
NEW QUESTION # 63
The risk management landscape has changed dramatically in recent history because of changes in all but which of the above?
- A. Globalization
- B. Finance
- C. Technology
- D. Global warming
Answer: D
Explanation:
Explanation
According to , page 3, some of the drivers for change in risk management landscape include technology (such as digitalization, automation, artificial intelligence), globalization (such as increased interdependence, complexity and diversity), finance (such as financial crises, regulations, standards) but not global warming.
NEW QUESTION # 64
Which ISO Standard is used for hazard identification and risk assessment?
- A. ISO 16776
- B. ISO 17776
- C. ISO 18776
- D. ISO 15776
Answer: B
NEW QUESTION # 65
ISO 31000:2018 currently has a tactical and process focus.
- A. False
- B. True
Answer: A
Explanation:
Explanation
The ISO 31000:2018 standard provides a framework for risk management, with a focus on the strategic and integrated aspects of risk management. It outlines principles, a framework, and a process for managing risk in organizations of all kinds. The focus of the standard is on aligningrisk management with the organization's context, objectives, and strategy, and on integrating risk management into all aspects of an organization's governance, culture, and performance.
NEW QUESTION # 66
Which of the following statements about captive insurance companies are correct?
1. A captive cannot act as a reinsurer.
2. A captive can access reinsurance markets.
3. A captive can sometimes offer greater cover than is available in the insurance market.
4. A captive must be located in the same country as its parent company.
- A. 1 and 2.
- B. 1 and 4.
- C. 2 and 3.
Answer: C
Explanation:
Explanation
According to 3, a captive insurance company is "a wholly owned subsidiary insurer that provides risk mitigation services for its parent company or related entities". It can act as a reinsurer by accepting risks from other insurers or captives 1. It can also access reinsurance markets to transfer some of its own risks 1. It can sometimes offer greater cover than is available in the insurance market by tailoring its policies to suit its parent's needs 3. It does not have to be located in the same country as its parent company; in fact, many captives are domiciledoffshore for tax or regulatory reasons
NEW QUESTION # 67
Inclusiveness is another critical attribute of good risk management.
- A. False
- B. True
Answer: B
Explanation:
Explanation
Inclusiveness is another critical attribute of good risk management. Inclusiveness helps to ensure that different perspectives, knowledge, and values are considered in risk management.
NEW QUESTION # 68
What does the probability of occurrence multiplied by the impact of the event, equals to
- A. Risk Magnitude
- B. Risk Scale
- C. Risk Tangent
- D. Risk Level
Answer: A
Explanation:
Explanation
According to , page 13-14, probability multiplied by impact equals risk magnitude which is "a measure that reflects both likelihood and consequences". It can be used as an indicator for prioritizing risks.
NEW QUESTION # 69
Which of the following is a process with inputs, activities, and outcomes?
- A. Quality management
- B. Relations management
- C. Risk management
- D. Financial management
Answer: C
Explanation:
Explanation
Risk management is a process with inputs, activities, and outcomes1. The inputs are the organization's context and risk criteria. The activities are risk identification, analysis, evaluation, and treatment. The outcomes are improved decision making, performance, and resilience.
NEW QUESTION # 70
Risk management is tailored.
- A. False
- B. True
Answer: B
Explanation:
Explanation
Risk management is tailored4. Tailored means that risk management takes into account the specific needs, objectives, and characteristics of each organization and its context.
NEW QUESTION # 71
Organizational information systems, information flows, and formal and informal decision-making processes are all a part of establishing which type of context in regard to the organization?
- A. Internal
- B. External
- C. Technological
- D. Local
Answer: A
Explanation:
Explanation
According to ISO31000 (2018), clause 5., establishing the context involves defining "the external and internal parameters to be taken into account when managing risk". The internal context includes "information systems, information flows and decision-making processes" among other factors.
NEW QUESTION # 72
What could a financial organisation make primary use of, to assess whether its risk management systems are likely to fail?
- A. Key control indicators.
- B. Key risk indicators.
- C. Physical inspections.
- D. Silo-based risk management.
Answer: B
Explanation:
Explanation
Key risk indicators are metrics that provide information about potential changes in the level of risk exposure3.
They can help an organisation monitor and manage its risks more effectively. Key control indicators are metrics that measure the performance of internal controls4.
NEW QUESTION # 73
How does a pure risk differ from a speculative risk?
- A. A pure risk is not subject to regulatory control but a speculative risk always is.
- B. A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain.
- C. A pure risk always has an environmental cause whereas a speculative risk always involves human error.
- D. A pure risk can be measured in probability terms whereas a speculative risk cannot.
Answer: B
Explanation:
Explanation
A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain12. For example, entering into a contract to purchase a new factory is a speculative risk, as it could result in either profit or loss depending on market conditions.
NEW QUESTION # 74
Which of the is a set of systematic, deliberate, and actionable steps to manage risk?
- A. Control
- B. Vision
- C. Security
- D. Process
Answer: A
Explanation:
Explanation
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.
NEW QUESTION # 75
Which management can be used in varied and complex settings?
- A. Safety
- B. Risk
- C. Quality
- D. Crisis
Answer: B
Explanation:
Explanation
Risk management can be used in varied and complex settings . Risk management can help organizations deal with uncertainty and complexity in any type of activity, industry, or sector.
NEW QUESTION # 76
Which of the following is a process with inputs, activities, and outcomes?
- A. Quality management
- B. Risk management
- C. Supply chain management
- D. Financial management
Answer: B
Explanation:
Explanation
Risk management is a process with inputs, activities, and outcomes1. The inputs are the organization's context and risk criteria. The activities are risk identification, analysis, evaluation, and treatment. The outcomes are improved decision making, performance, and resilience.
NEW QUESTION # 77
When defining the success measures for the organization's risk strategy, the risk management professional will include which of the following steps?
- A. An analysis of the organization's total cost of insurable risk
- B. The development of timelines for implementing the risk strategy
- C. A review of the goals and objectives of the risk strategy
- D. A selection of appropriate media for communicating the risk strategy
Answer: C
Explanation:
Explanation
A review of the goals and objectives of the risk strategy is part of defining the success measures for the organization's risk strategy1. This helps to ensure that the risk strategy aligns with the organization's purpose, vision, mission and values.
NEW QUESTION # 78
Which of the following is becoming the basis for all decision making?
- A. Quality management
- B. Marketing management
- C. Risk management
- D. Crisis management
Answer: C
Explanation:
Explanation
Risk management is becoming the basis for all decision making2. Risk management helps organizations to identify opportunities and threats, evaluate alternatives, and make informed choices.
NEW QUESTION # 79
Which step is the last part of the risk assessment process, which started with risk identification then moved to risk assessment, and finally risk evaluation?
- A. Risk evaluation
- B. Risk avoidance
- C. Risk outsourcing
- D. Risk acceptance
Answer: A
Explanation:
Explanation
the last step of the risk assessment process, which starts with risk identification, moves to risk assessment, and finally risk evaluation, is Risk evaluation.
Risk evaluation involves comparing the estimated level of risk against the risk criteria established during the risk assessment phase, to determine the significance of the risk and whether it is acceptable or not. This decision is made in consultation with stakeholders, who may provide additional context and information to inform the decision.
The American Society for Quality (ASQ) describes risk evaluation as "the process of comparing an estimated risk against given risk criteria to determine the acceptability of the risk." [1] Similarly, ISO/IEC 27001:2013 (Information technology - Security techniques - Information security management systems - Requirements) defines risk evaluation as "the process of comparing the estimated risk against given risk criteria in order to determine the significance of the risk." [2] References: [1] ASQ Glossary - Risk evaluation, https://asq.org/quality-resources/risk-evaluation [2] ISO/IEC
27001:2013, Clause 6.1.3(c), https://www.iso.org/standard/54534.html
NEW QUESTION # 80
After validating the training curricula, a risk management professional
- A. matches training to audience.
- B. develops and schedules training.
- C. develops training.
- D. schedules and conducts training.
Answer: D
Explanation:
Explanation
According to , page 23, after validating the training curricula, a risk management professional schedules and conducts training sessions based on the target audience's needs and availability.
NEW QUESTION # 81
Which of the following step is a critical part of risk assurance?
- A. Monitoring and Review
- B. Evaluation Context
- C. Communication and Consultations
- D. Establishing Context
Answer: A
Explanation:
Explanation
Monitoring and review is a critical part of risk assurance . This step involves checking whether the risk management framework, policy, and plan are implemented, whether they remain suitable, and whether they need improvement.
NEW QUESTION # 82
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