Understanding Risk Management Frameworks in Business Accounting
School
Eastern Gateway Community College**We aren't endorsed by this school
Course
ACC 112
Subject
Information Systems
Date
Dec 10, 2024
Pages
2
Uploaded by DeaconCamelPerson1208
Risk Management Frameworks within Business Accounting1.Which of the following best describes the purpose of a risk management framework?A) To eliminate all risks associated with business operations.B) To provide a structured approach for identifying, assessing, and mitigating risks.C) To ensure compliance with international financial reporting standards.D) To increase the profitability of the organization.2.What is a key component of effective internal controls in risk management?A) Outsourcing all accounting functions.B) Implementing a strong supervisory review process.C) Allowing unrestricted access to financial systems.D) Focusing solely on financial reporting accuracy.3.In risk assessment methodologies, what does the term “risk appetite” refer to?A) The amount of risk an organization is willing to accept.B) The total number of risks an organization can manage.C) The methods used to eliminate risks.D) The financial resources allocated to risk management.4.Which framework is commonly used for internal control assessments?A) ISO 9001B) COSOC) GAAPD) IFRS5.What is the primary focus of compliance audits in business accounting?A) To assess the efficiency of operations.B) To ensure adherence to laws, regulations, and internal policies.C) To evaluate the financial performance of the organization.D) To identify new business opportunities.6.Which of the following is a common risk assessment technique?A) SWOT analysisB) Employee satisfaction surveysC) Market share analysisD) Cash flow forecasting7.What does the term “residual risk” mean in the context of risk management?A) The risk that remains after all mitigation efforts have been implemented.B) The initial risk identified before any controls are applied.C) The risk associated with new business ventures.D) The total amount of risk faced by an organization.8.In the context of internal controls, what is the purpose of segregation of duties?A) To minimize the number of employees involved in processes.B) To prevent fraud and errors by ensuring that no single individual has control over all aspects of a transaction.C) To streamline processes for efficiency.D) To empower employees to take initiative.
9.Which of the following statements is true regarding risk management frameworks?A) They are only necessary for large organizations.B) They are static and do not need regular updates.C) They should be integrated into the overall business strategy.D) They focus solely on financial risks.10.What is the role of risk tolerance in a risk management framework?A) It dictates the specific risks an organization will ignore.B) It defines the level of risk that is acceptable for the organization based on its goals and resources.C) It is a measure of how much risk can be transferred to third parties.D) It has no impact on the organization’s operations.11.Which of the following is an example of a qualitative risk assessment method?A) Monte Carlo simulationB) Risk matrixC) Value at risk (VaR)D) Statistical analysis12.What is the primary benefit of conducting regular compliance audits?A) They reduce the incidence of operational inefficiencies.B) They ensure financial statements are prepared accurately.C) They help organizations stay compliant with regulations and avoid penalties.D) They enhance the organization’s public image.13.Which of the following is a potential consequence of inadequate risk management?A) Improved operational efficiencyB) Increased stakeholder confidenceC) Financial losses and reputational damageD) Enhanced strategic decision-making14.What is the significance of risk communication in a risk management framework?A) It is irrelevant to effective risk management.B) It ensures that all stakeholders are informed about risks and their management strategies.C) It focuses solely on communicating with regulatory bodies.D) It is primarily concerned with internal communications among managers.15.How does technology play a role in modern risk management frameworks?A) It decreases the need for human oversight in risk management.B) It provides tools for better data analysis and monitoring of risks.C) It complicates the risk management process.D) It eliminates the necessity for compliance audits.