Month: November 2024

Process risk, people risk, and event risk are all forms of?

Select ONE answer:

1. Operational risk
2. Financial risk
3. Business risk
4. Strategy risk

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > These risks are to do with the operations of the business – a process going wrong, a valued employee leaving, a regulation being broken.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex Ltd is renewing its buildings and contents insurance policy covering its eight Staffordshire factories.

In terms of risk management, this is an example of?

Select ONE answer:

1. Risk avoidance
2. Risk reduction
3. Risk transfer
4. Risk retention

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Insurance transfers risk. In return for an insurance premium, the insurance company agrees to take on an agreed proportion of the financial burden of a risk for Alex Ltd.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

An organisation responds to an identified risk by restructuring.

Which category of control has it used?

Select ONE answer:

1. Physical controls
2. System controls
3. Management controls
4. Financial controls

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Management controls include all aspects of management that ensure the business is properly planned, controlled and led, including the organisation’s structure.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex plc has analysed a particular risk faced by its Stafford division on a risk map.

It has concluded that the matter that was analysed has a low impact on the business but there is a high probability of its occurrence.

Which of the following risk responses by Alex plc would be most appropriate?

Select ONE answer:

1. Risk avoidance
2. Risk reduction
3. Risk transfer
4. Risk acceptance

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct == > Where a risk falls into the low impact, high probability quadrant of the risk map the most appropriate response is risk reduction, focusing on reducing the likelihood of the adverse event occurring.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which of the following sequences represents the order in which an organisation should respond to risk?

Select ONE answer:

1. Reduction, avoidance, sharing (or transfer), acceptance (or retention)
2. Avoidance, reduction, sharing (or transfer), acceptance (or retention)
3. Reduction, sharing (or transfer), avoidance, acceptance (or retention)
4. Avoidance, sharing (or transfer), reduction, acceptance (or retention)

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct == > First the company should see if the risk can be avoided; if not, it should try to reduce it; having reduced it as far as is feasible, it should explore the possibilities for sharing the risk (e.g. using insurance). Finally, it must accept the remaining risk.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.