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ISO-31000-CLA
ISO 31000 - Certified Lead Risk Manager Questions and Answers

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Questions # 21:

A train has crashed and is badly damaged. There have been numerous claims from injured passengers as well as a loss of revenue for the train operator. This is an example of

Options:

risk aggregation.

risk categorisation.

risk probability.

risk severity.

Answer

Explanation

A train crash and its consequences is an example of risk aggregation, which is the combined effect of multiple risks on an organisation’s objectives3. Risk aggregation can result in losses that are greater than the sum of individual losses.

Questions # 22:

Which of the following statements does not apply to ISO 31000?

Options:

It is the first standard issued by ISO for risk management

It can be used by any organization regardless of its size, activity or sector

It can be used for certification purposes

Answer

Explanation

According to ISO31000 (2018), clause 1., it is “not intended for certification purposes”. It provides guidance on how organizations can manage their risks effectively using a systematic approach based on principles, framework and process 3.

Questions # 23:

From the three actions Tom Brown is undertaking, which is categorised as a pure risk?

Options:

Buying 100 lottery tickets

Selling his house even though he receives less than he paid for it because he thinks prices will fall further.

Going horse riding without wearing a riding helmet.

Answer

Explanation

According to 1, page 9, pure risk is “a situation where there are only two possible outcomes: loss or no loss”. Buying lottery tickets and selling a house are examples of speculative risk, where there is a possibility of gain or loss. Going horse riding without a helmet is an example of pure risk, where there is only a possibility of loss (injury) or no loss.

Questions # 24:

Within an organisation, when attempting to manage and control risk, the organisation should be aware that

Options:

consideration of risk perception is not required.

consideration should be given to internal controls only.

uncertainty must be taken into account

uncertainty need not be considered.

Answer

Explanation

Within an organisation, when attempting to manage and control risk, uncertainty must be taken into account4. Uncertainty refers to “the state, even partial, of deficiency of information related to understanding or knowledge of an event” 4 and it influences both risks and opportunities.

Questions # 25:

Which management is core to governance and compliance?

Options:

Risk

Crisis

Quality

Fillet

Answer

Explanation

Risk management is core to governance and compliance4. Risk management helps to ensure that organizational objectives are achieved in a lawful, ethical, and transparent manner.

Questions # 26:

A large manufacturing organisation has renewed an insurance policy and has accepted a significant increase in the policy deductible. What is this most likely to indicate?

Options:

Decreased risk avoidance.

Decreased risk tolerance.

Increased risk elimination.

Increased risk retention.

Answer

Explanation

A large manufacturing organisation has renewed an insurance policy and has accepted a significant increase in the policy deductible. This is most likely to indicate increased risk retention, which means accepting more responsibility for potential losses5. This could be done to reduce insurance premiums or increase control over claims.

Questions # 27:

Which of the following are two ISO 31000:2018 risk management principles? (Choose two)

Options:

Integrated

Customized

Functional

Statistical

Design

Strategy

Answer

A, B

Explanation

Integrated and customized are two of the nine risk management principles in ISO 31000:20181. Integrated means that risk management is an integral part of all organizational activities. Customized means that risk management is aligned with the organization’s external and internal context and risk profile.

Questions # 28:

Which of the is a set of systematic, deliberate, and actionable steps to manage risk?

Options:

Security

Control

Process

Vision

Answer

Explanation

Control is not a set of systematic, deliberate, and actionable steps to manage risk, but rather a measure or action that modifies risk1. Process is a set of systematic, deliberate, and actionable steps to manage risk2. Process involves establishing context, identifying risks, analyzing risks, evaluating risks, and treating risks.

Questions # 29:

A program officer and a security manager are planning a focus group discussion with community members on potential risks related to projects on female empowerment in local secondary schools. What is the best approach for them to take to define the context?

Options:

Identify any increase of risk with the introduction of a female empowerment project.

Review the roles of the humanitarian principles in relation to education.

Define gender equality in the school environment.

Discuss the role of girls and how they are viewed by community members.

Answer

Explanation

According to , page 9, defining the context involves “understanding what influences people’s perception and tolerance of risks”. Discussing how girls are viewed by community members can help identify potential sources of resistance, conflict or violence that may affect the project’s objectives and outcomes.

Questions # 30:

Which management ensures that value is created by identifying opportunities for investment, mergers, or acquisition.

Options:

Risk

Quality

Crisis

Safety

Answer

Explanation

Risk management ensures that value is created by identifying opportunities for investment, mergers, or acquisition. Risk management helps to assess the potential benefits, costs, and risks of different options and make informed decisions.

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