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

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.

According to 1, systemic risk is “the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy”. It is different from other types of risks that affect only specific parts or aspects of an organization 2.

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.

Human element is often the biggest challenge in risk implementation. Human element involves overcoming resistance to change, engaging stakeholders, building trust and commitment, and fostering a positive risk culture.

Enhanced risk management emphasizes the continual improvement of risk management capabilities1. This means that risk management is regularly reviewed and updated to ensure its relevance, adequacy, and effectiveness.

Communication with stakeholders, customers, and interested parties is an essential element for maintaining the relevance of enhanced risk management within the structure of a changing context3. Communication helps to establish trust, transparency, accountability, and feedback mechanisms for risk management.

According to , page 17, a crisis management team (CMT) is “a group of senior managers who have been delegated authority by an organization’s executive leadership team to make decisions during a crisis”. A centralized decision making structure allows for faster and more coordinated responses in an emergency situation.

According to ISO31000 (2018), clause 5., establishing the context involves defining “the external and internal parameters to be taken into account when managing risk”. The internal context includes “information systems, information flows and decision-making processes” among other factors.

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.

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.

Risk management processes, outcomes, and activities should be traceable5. This means that there should be a clear record of how risks were identified, analyzed, evaluated, treated, monitored, reviewed, and communicated.

Risk assessment teams are composed of cross functional subject matter experts, risk experts, and process owners. Risk assessment teams conduct risk assessments for specific areas or projects within the organization.