To establish an enterprise risk appetite, an organization should:
Correct Answer: C
To establish an enterprise risk appetite, it is essential for an organization to establish risk tolerance for each business unit. Risk tolerance defines the specific level of risk that each business unit is willing to accept in pursuit of its objectives. This approach ensures that risk management is tailored to the unique context and operational realities of different parts of the organization, enabling a more precise and effective risk management strategy. Normalizing risk taxonomy and aggregating risk statements are important steps in the broader risk management process but establishing risk tolerance is fundamental for defining risk appetite at the unit level. This concept is supported by standards such as ISO 31000 and frameworks like COSO ERM (Enterprise Risk Management).
Question 7
Which of the following is the PRIMARY concern with vulnerability assessments?
Correct Answer: C
The primary concern with vulnerability assessments is the presence of false positives. Here's why: * Threat Mitigation: While vulnerability assessments help in identifying potential vulnerabilities that need to be mitigated, this is not a concern but an objective of the assessment. It aims to provide information for better threat mitigation. * Report Size: The size of the report generated from a vulnerability assessment is not a primary concern. The focus is on the accuracy and relevance of the findings rather than the volume of the report. * False Positives: These occur when the vulnerability assessment incorrectly identifies a security issue that does not actually exist. False positives can lead to wasted resources as time and effort are spent investigating and addressing non-existent problems. They can also cause distractions from addressing real vulnerabilities, thus posing a significant concern. The primary concern, therefore, is managing and reducing false positives to ensure the vulnerability assessment is accurate and effective.
Question 8
A business impact analysis (BIA) generates the MOST benefit when:
Correct Answer: C
A business impact analysis (BIA) generates the most benefit when using standardized frequency and impact metrics. Here's why: * Keeping Impact Criteria and Cost Data as Generic as Possible: This approach would not provide the necessary specificity and accuracy needed to understand the unique impacts on the organization. Generic data lacks the precision required for effective decision-making. * Measuring Existing Impact Criteria Exclusively in Financial Terms: While financial metrics are important, limiting the analysis to financial terms alone ignores other critical factors such as reputational impact, operational disruption, and compliance issues. A comprehensive BIA should include a variety of impact criteria. * Using Standardized Frequency and Impact Metrics: Standardization ensures consistency, comparability, and reliability of the data collected. It allows for a systematic evaluation of risks and impacts across different scenarios, facilitating better decision-making and prioritization. Therefore, using standardized frequency and impact metrics is essential for generating the most benefit from a BIA.
Question 9
As part of the control monitoring process, frequent control exceptions are MOST likely to indicate:
Correct Answer: B
Control Monitoring Process: * The control monitoring process involves regular review and assessment of controls to ensure they are operating effectively and as intended. Frequent Control Exceptions: * Frequent exceptions in control processes often indicate that the controls are not aligning well with the business priorities or operational needs. * This misalignment can occur when controls are too rigid, outdated, or not suited to the current business environment, leading to frequent violations or bypassing of controls. Comparison of Options: * Aexcessive costs associated with the use of a control might be a concern, but it is not the primary reason for frequent exceptions. * Chigh risk appetite throughout the enterprise might lead to more accepted risks but does not directly explain frequent control exceptions. Conclusion: * Therefore, frequent control exceptions are most likely to indicatemisalignment with business priorities .
Question 10
For risk reporting to adequately reflect current risk management capabilities, the risk report should be based on the enterprise:
Correct Answer: B
* Understanding Risk Reporting: * For risk reporting to accurately reflect current risk management capabilities, it should be based on the organization's current risk profile, which provides a comprehensive view of all identified risks, their severity, and their impact on the organization. * Components of Risk Reporting: * Risk Management Framework(A) provides the overall approach and guidelines for managing risk but does not reflect the current state of risks. * Risk Appetite(C) defines the level of risk the organization is willing to accept but does not detail the current risks being managed. * Current Risk Profile: * The risk profile offers a detailed snapshot of the current risks, including emerging risks, changes in existing risks, and the effectiveness of the controls in place to manage these risks. * This aligns with guidelines from frameworks such as ISO 31000 and COSO ERM, which stress the importance of a dynamic and current view of the risk landscape for effective risk reporting. * Conclusion: * Therefore, to reflect current risk management capabilities, the risk report should be based on the enterprise'srisk profile.
