IC86 Mock Test Sample 20
These questions cover important concepts of Risk Management, Enterprise Risk Management (ERM), Basel Accord, stress testing, HAZOP studies, COSO framework, risk mitigation, risk identification methods, and financial risk evaluation. The topics explain how organizations identify, assess, control, and finance risks using methods like flow charts, inspections, fault trees, and stress testing. Questions also focus on disaster management phases, allocation of risk management costs, proactive risk controls, and calculation of gross profit. ERM frameworks such as COSO and Basel emphasize strategic risk handling, monitoring, internal controls, and maintaining business continuity for organizational survival, profitability, and long-term operational stability.
Q1. State the reason for applying stress testing to all divisions of a company?
a. To determine the accessibility of each division under a risk event
b. To determine the viability of each division under a risk event
c. To determine the liquidity of each division under a risk event
d. To determine the performance of each division under a risk event
Q2. Suggest how should the costs related to risk management activities be allocated?
a. Only 1
b. Only 3
c. Both 1 and 2
d. Both 2 and 3
Q3. Techniques and approaches like Study and Enquiry, Physical inspections, Check lists, Flow Charts etc. are used for _______ of risks?
a. Identification
b. Solving
c. Evaluation
d. Assessment
Q4. ‘Technological Advances’ is an example of which peril?
a. Human Peril
b. Social Peril
c. Economic Peril
d. Natural Peril
Q5. The ________ phase of a risk management programme is concerned with containing the effect of any damaging or harmful incident.
a. Pre Event
b. During Event
c. Post Event
d. Subsequent phase
Q6. The _________ is a diagrammatic representation of all events which may give rise to some major event which can cause a loss or damage.
a. Flow Chart
b. Fault Tree
c. Study and Enquiry
d. Organizational charts
Q7. The latest version of Basel Accord is ____________.
a. Basel I
b. Basel II
c. Basel III
d. Basel IV
Q8. The act of insuring, which _________________ that the desired outcome will occur is known as Moral hazard.
a. Only I
b. Only II
c. Only III
d. I and II
Q9. Identify the changes included in Basel II Accord.
a. Only II
b. I and II
c. I and III
d. II and III
Q10. The basic objective of management after it has suffered a loss will be -
a. Growth
b. Stability of earnings
c. Survival
d. Continuity of operations
Q11. The combination of three basic elements i.e. Values exposed to loss, Perils causing loss and Financial consequences of loss leads to _______.
a. Only 1
b. Only 2
c. Only 3
d. Both 1 and 2
Q12. The components required for achieving the four categories of objectives that form the framework of ERM are ______.
a. 1 and 2
b. 2 and 3
c. 1 and 3
d. All 1, 2 and 3
Q13. The concept and process of Risk Management does NOT include ______.
a. Identification of risk
b. Control and prevention of risk
c. Transfer of risk
d. Complete elimination of risk
Q14. The COSO approach is a comprehensive ERM system that takes a _____ approach to risk management.
a. Top Down
b. Bottom Up
c. Short Term
d. Long Term
Q15. The COSO approach is a comprehensive ERM system. It takes which of the following approach to risk management?
a. Long Term
b. Operational
c. Strategic
d. Top to bottom
Q16. The cost of risk is dependent on which of these variables?
a. Only 1
b. Only 3
c. Only 1 and 2
d. All 1, 2 and 3
Q17. The definition of Risk Management says - “Risk Management is the _______ of risk factors.”
a. Prevention, Evaluation and Control
b. Reviewing, monitoring and managing
c. Identification, Evaluation, Control and Prevention
d. Identification, Analysis, Control and Prevention
Q18. The factors which influence the quality of ERM is/are _______.
a. Only 2
b. Only 3
c. Both 1 and 2
d. All 1, 2 and 3
Q19. Arrange the following Risk Mitigation Activities in correct sequence.
a. 4, 3, 1, 2
b. 2, 1, 3, 4
c. 3, 2, 4, 1
d. 2, 3, 4, 1
Q20. The formula for calculating GROSS PROFIT is _______.
a. Sales – Factory fixed costs – Allocated overheads
b. Sales – Factory fixed costs + Allocated overheads
c. Sales – (Variable costs – Factory fixed costs – Allocated overheads)
d. Sales – (Variable costs + Factory fixed costs + Allocated overheads)
