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APRP Vocab correctly answered 2024
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APRP Vocab correctly answered 2024 Course
APRP
Question 1:
What is the definition of 'risk management'?
A) The process of avoiding all risks in an organization
B) The identification, assessment, and prioritization of risks followed by coordinated efforts
to minimize, monitor, and control the probability or impact of unfortunate events
C) The evaluation of financial statements
D) The development of marketing strategies
Answer: B) The identification, assessment, and prioritization of risks followed by
coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate
events
Rationale: Risk management involves systematic processes to manage risks effectively,
aiming to reduce their negative effects on an organization.
Question 2:
What does the term 'inherent risk' refer to?
A) The risk that remains after controls are implemented
B) The level of risk present in the absence of any controls
C) The risk of operational failure
D) The risk of market fluctuations
Answer: B) The level of risk present in the absence of any controls
Rationale: Inherent risk is the natural exposure to risk before any risk management measures
are applied, reflecting the risk's baseline level.
Question 3:
Which term describes the practice of transferring risk to another party?
A) Risk avoidance
B) Risk retention
C) Risk transference
D) Risk acceptance
Answer: C) Risk transference
Rationale: Risk transference involves shifting the burden of risk to another party, often
through mechanisms like insurance or outsourcing.
,Question 4:
What is 'residual risk'?
A) The risk that is completely eliminated
B) The risk that remains after risk management controls are applied
C) The risk that is not acknowledged
D) The risk associated with employee turnover
Answer: B) The risk that remains after risk management controls are applied
Rationale: Residual risk is the leftover risk after an organization has implemented measures
to mitigate it, indicating that some risk will always persist.
Question 5:
What does 'risk appetite' mean?
A) The total financial resources available to an organization
B) The level of risk an organization is willing to accept in pursuit of its objectives
C) The likelihood of a risk occurring
D) The organizational structure for managing risk
Answer: B) The level of risk an organization is willing to accept in pursuit of its objectives
Rationale: Risk appetite defines how much risk an organization is prepared to take on while
seeking its goals, guiding decision-making processes.
Question 6:
Which term describes a systematic approach to identifying and assessing risks?
A) Risk evaluation
B) Risk management process
C) Risk control
D) Risk communication
Answer: B) Risk management process
Rationale: The risk management process encompasses the systematic steps of identifying,
assessing, and managing risks to minimize their impact.
Question 7:
,What is 'risk mitigation'?
A) Accepting risks as they are
B) Avoiding risks altogether
C) Taking steps to reduce the severity or likelihood of risks
D) Transferring risks to another party
Answer: C) Taking steps to reduce the severity or likelihood of risks
Rationale: Risk mitigation involves strategies and actions aimed at reducing the impact or
probability of identified risks.
Question 8:
What does 'due diligence' refer to in risk management?
A) The process of ensuring compliance with regulations
B) The effort made by an organization to assess risks and ensure proper risk management
practices are in place
C) The financial audit of an organization
D) The marketing analysis of products and services
Answer: B) The effort made by an organization to assess risks and ensure proper risk
management practices are in place
Rationale: Due diligence is a proactive approach to understanding and managing risks,
ensuring that appropriate measures are taken to mitigate them.
Question 9:
What does 'business continuity planning' involve?
A) Strategies for maximizing profits
B) The process of preparing for and recovering from disruptive events
C) Assessing employee performance
D) Analyzing market trends
Answer: B) The process of preparing for and recovering from disruptive events
Rationale: Business continuity planning focuses on maintaining essential functions during
and after a disaster, ensuring that an organization can recover quickly.
Question 10:
Which of the following best describes 'operational risk'?
, A) The risk of loss from inadequate or failed internal processes, people, and systems
B) The risk associated with external market factors
C) The risk of losing intellectual property
D) The risk of legal non-compliance
Answer: A) The risk of loss from inadequate or failed internal processes, people, and
systems
Rationale: Operational risk encompasses the potential for losses arising from failures in an
organization's internal processes, personnel, or technology.
Question 11:
What does the term 'risk tolerance' refer to?
A) The level of risk that is acceptable for a specific project
B) The willingness of an organization to accept a certain level of risk
C) The maximum amount of risk that can be mitigated
D) The process of transferring risk
Answer: B) The willingness of an organization to accept a certain level of risk
Rationale: Risk tolerance is the degree of variability in investment returns that an
organization is willing to withstand in its pursuit of its objectives.
Question 12:
What is 'compliance risk'?
A) The risk of losing a significant customer
B) The risk associated with failing to meet legal or regulatory requirements
C) The risk of operational failures
D) The risk from market fluctuations
Answer: B) The risk associated with failing to meet legal or regulatory requirements
Rationale: Compliance risk arises when an organization does not adhere to laws, regulations,
and internal policies, potentially resulting in legal penalties.
Question 13:
What does the term 'contingency plan' mean?
A) A plan for daily operations
B) A strategy for addressing potential future events that could disrupt operations
C) A marketing strategy
D) A financial investment strategy
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