1- The COSO Enterprise Risk Management Integrated Framework is designed to help

Question

1- The COSO Enterprise Risk Management Integrated Framework is designed to help an organization achieve its

objectives in four categories. One category is the effective and efficient use of company resources. This category is

the..?.

A. Strategic category

B. Reporting category

C. Compliance category

D. Operations category

2- The COSO Enterprise Risk Management—Integrated Framework includes eight interrelated components that

should be integrated within an organization's risk management process. Which one of the following components is a

key feature of the COSO standard but not other risk management standards?

A. Communication

B. Risk assessment

C. Control activities

D. Risk identification

3- Risk to an entity apart from any action to alter either the likelihood or impact of the risk is known as?

A. Inherent risk

B. Nondiversifiable risk

C. Objective risk

D. Residual risk

What is the right answer for these questions?

Explanation / Answer

1. The answer is option “D” – Operations category.

Strategic category is related to mission, reporting category is related to entity’s requirement for reporting that is reliable and compliance category is with regards to the need to comply with the rules and laws that is applicable for the entity.

2. The answer is option “C” – control activities.

COSO had historically focused on financial controls. This focus led COSO to develop a risk management framework of its own with regards to internal audits.

3. The answer is option “A” – inherent risk.

Inherent risk is different from residual risk which is the risk that remains after the actions have been taken to alter the risk’s impact.

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