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In terms of risk management, what is control?
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An organization examines the level of probability for all types of losses to which it may be exposed. What aspect of risk is the organization studying?
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SHRM Risk Management
Functional Area 12
| Question | Answer |
|---|---|
| In terms of risk management, what is control? | Measure taken to reduce the probability or severity of a threat. A control is any measure that modifies risk by decreasing the likelihood that a risk event will occur or the impact that the event would have on the organization. |
| An organization examines the level of probability for all types of losses to which it may be exposed. What aspect of risk is the organization studying? | Vulnerability. Vulnerability refers to the degree of probability that a loss will occur. |
| What is the best method to use when training employees on an emergency response plan? | Conduct drills and role plays. The best way to practice any skill is to actually do the tasks involved. |
| What is the primary purpose of a safety self-audit? | To ensure employee compliance with the organization's safety programs. A safety self-audit is conducted by an employer to assure the organization that employees are following safety-related policies and procedures. |
| What is the best way to evaluate an emergency response plan? | Conduct a crisis drill. A simulated crisis in which the plan is tested will alert the company to changes that need to be made and is the best way to see how the plan performs. |
| What is the primary distinguishing characteristic of an enterprise risk management framework? | Perception of risk as an integrated organizational issue. An enterprise risk management (ERM) system, such as COSO ERM, sees risk as an integrated issue that must be managed across divisions and functions in an enterprise. |
| What is the best example of risk mitigation? | A risk mitigation strategy seeks to reduce the impact of an event rather than prevent it. A communication system cannot prevent crises, but it can decrease stress and reduce assignees' exposure to threats. |
| What is meant by the term "residual risk"? | Amount of uncertainty remaining after all management efforts have been made. |
| An HR manager is preparing a risk management plan for a manufacturing floor. The manager has reviewed accident records from the past five years and talked with an insurer. What is the best way to obtain additional useful information? | Walk through the area and observe conditions during work operations. The best solution among those offered would be direct observation. |
| Which HR professional is fulfilling the correct role of HR in managing organizational risk? | HR conducts a workshop with other functions to identify potential upside and downside risks to the next workforce management plan. The best role recognizes the potential for upside (opportunity) and downside (threat) aspects of risk. |
| What is the usefulness of a key risk indicator (KRI)? | A KRI provides early warning of risk emergence. A KRI is a metric that signals when risk exposure may be increasing. It can be used to identify emerging risks to the organization. |
| What key characteristic of an effective risk management program is identified in ISO 31000? | Fits the organization's risk and control environment. It cannot be a standard or "boilerplate" program but must manage the organization's unique risks with realistic and appropriate controls. |
| What is a good example of an upside risk? | A team finishes its project two weeks ahead of the schedule. An upside risk is an opportunity that arises out of uncertainty about outcomes. |
| A global organization establishes evacuation procedures and communication plans for company sites. The organization creates a website outside the company's firewall if the organization's network goes down. What activity has the organization completed? | Emergency response planning. An emergency response plan describes the actions to be taken in the event of a natural disaster, emergency evacuation, terrorist attack, or any other incident that disrupts the normal work pattern. |
| What factors does the risk equation use to determine level of risk? | Probability of occurrence and magnitude of impact. In the risk equation, the level of risk equals the probability of occurrence multiplied by the magnitude of the impact of the risk event. |
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