P3 Exam Dumps - Risk Management

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Question # 17

Which risks should be given the highest priority?

Risks which have aÂ high impact andÂ have a low likelihood of arising.

Risks which have aÂ low impact but which arise frequently.

Risks which have a low impact and a low likelihood of arising.

Risks which have a high impact and which may arise occasionally.

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Question # 18

Which of the following statements are true of residual risk?

Residual risk has to be accepted.

Residual risk is the risk that remains after risk mitigation has taken place.

If residual risk is too great then the company should not expose itself to the risk situation.

Residual risk may be accepted if management feels the companyÂ can bear the risk.

Residual risk should never be accepted.

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Question # 19

Passwords are frequently used to control access to computer systems.

Which of the following characteristics should a password have in order to make it effective?

Passwords should be short words or names that users will easily remember.

Passwords should contain 20 characters or more.

Passwords should be changed on a regular basis.

The strength of a password is increased by using upper and lower case and including numerals.

Passwords should be written down in a secret place.

Passwords should never be shared.

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Question # 20

B, a construction company, has a policy of carrying out a post completion audit on every construction project undertaken where the value exceeds $1 million.

What is the role of the post completion audit?

To reward staff and celebrate success.

To signify the end of the project.

To highlight what can be done to improve similar future projects.

To apportion blame for things not done well.

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Question # 21

The Board of Directors of VCX, a state-owned electricity company, includes four executive directors the Chief Executive Officer, the Finance Director the Operation Director and the Technical Director

All of the shares in the company vest in the Office of the Minister for Energy, who is entitled to appoint two non-executive directors to the Board It has been alleged that the Minister appoints political "insiders" who have no particular knowledge of. or interest in. the electricity industry

There are three further non-executive directors

â€¢ L, who spent seven years as Chief Executive of VCX, but retired from that role two years ago,

â€¢ M, who spent several years on the Board of a state electricity company in a different country to VCX but who resigned from it before accepting the position with VCX: and

â€¢ N, who is a qualified and experienced professional accountant

In relation to best practice in respect of Corporate Governance, which of the following statements are valid? Select ALL that apply

None of the executive directors should be allowed to sit on the Remuneration Committee

M is unsuitable to be part of the Board because his previous involvement with a similar company in another country is a conflict of interest.

L can now be considered to be an independent non-executive director

M and N are both suitable appointees to the Audit Committee

The Finance Director should be part of the Audit Committee because of her expertise

Non-executive directors should be responsible for monitoring the performance of executive management especially with regard to company strategy and objectives

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Question # 22

Which of the following scenarios might be relevant stress tests for a potential lender to conduct? Which TWO of the following answers are correct?

The potential borrower could be involved in an accounting scandal

The potential borrower might have manipulated the figures in the loan application.

The potential borrower might lose its three main customers.

The potential borrower might seek further debt in the future.

The potential borrower might have to agree to a major wage increase for its employees.

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Question # 23

TRF is conducting a post completion audit on an investment in a pollution control machine that has reached the end of its five year useful life.

TRF could have been heavily fined if the machine had failed to keep pace with the output of emissions, measured in units. TRF's cost of capital is 10%. When the machine was purchased, there was a choice of three machines on the market:

TRF purchased the Big machine, but annual requirements only exceeded 600,000Â once, in year 3, when 720,000 units of emissions were emitted.

Calculate the amount that the post completion audit showsÂ TRF overpaid for the ownership costs associated with this machine.

Give your answer to the nearest whole $ (in $'000s).

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Question # 24

Rio owns an architects business which employs 12 skilled architects and four administrative staff.

TheÂ OfficeÂ ManagerÂ has just attended a workshop on internal controls and the way in which they can improve organisations. He intends to implement some internal controls as soon as possible.

What are the limitations of an internal control system in Rio's business?

Internal controls are only suitable for large businesses.

Employees could ignore the internal controls.

If Rio does not support the internal control system then the controls may not be adhered to.

Internal controls may slow down the speed with which the architects can respond to enquiries.

Internal controls will usually mean hiring more staff.

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