Free GAQM ISO-31000-CLA Practice Exam with Questions & Answers | Set: 2

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.

Monte Carlo simulation is a risk analysis technique that uses random variables to model uncertainty and generate possible outcomes2. This helps to assess the probability and impact of different scenarios.

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.

Risk management takes human and cultural factors into account1. Human factors include perception, judgment, behavior, and communication that influence risk management. Cultural factors include values, beliefs, norms, and expectations that shape the organization’s risk culture.

Recording and reporting documents information that are relevant to the organization’s riskmanagement framework, process, and system2. These activities help to provide evidence, feedback, learning, and improvement for risk management.

Risk management is a strategic management process2. Risk management helps organizations to align their objectives, strategies, and actions with their external and internal environment.

Systematic means doing something according to a plan or method. Systematic implies orderliness, consistency, and rigor in applying risk management.

When an operational area develops a treatment for a critical risk, the risk management professional must evaluate the impact upon other areas3. This helps to ensure that the treatment does not create new risks or adversely affect other objectives.

ISO 31000:2018 offers a generic outline for the design of the risk management framework and process. ISO 31000:2018 provides guidelines that can be adapted to any organization’s situation and circumstances.

According to 3, page 6, one of the current trends in auditing, risk management and compliance is “moving from a back-office function providing lagging indicators about risk (e.g., audit findings) to a front-office function providing leading indicators about risk (e.g., key risk indicators)”.