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PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:

1. Which of the following should NOT be part of the Risk Management Infrastructure?

A) Be independently staffed and report to an employee who is on the Executive Committee (Operating Committee) but who is NOT a business unit leader
B) Include financial risk management, compliance and external reporting and, to the extent that resources allow, should exclude legal or accounting
C) Define the organization's definition of risk management as articulated by the Board in clear and uncertain terms
D) Review continually the application of the Principles of Good Governance to the Risk Management Infrastructure, financial accounting and reporting infrastructure and the organization as a whole


2. Select the one correct statement relative to Barings Bank.

A) Proprietary and agency trading were separate and therefore did not increase risk.
B) Proprietary and agency trading were combined and therefore did not increase risk.
C) Proprietary and agency trading were separate and did increase risk.
D) Proprietary and agency trading were combined and therefore did increase risk.


3. The problems at Bankgesellschaft Berlin can best be characterized as failures related to:

A) Both B and C
B) Operational Risk
C) Market Risk
D) Credit Risk


4. An Organization as a Whole must:
I. Provide an environment in which an Escalation Policy can be effective II. Commit itself to actual enforcement of corporate governance policies III. Provide ongoing education and training to all employees on the role of risk management and corporate governance in the organization IV. Publish an external auditor's opinion that the corporation is in compliance with the Board's publicly stated Standards of Corporate Governance

A) All of these are expectations of the Organization as a Whole
B) I, II and III only
C) I, II and IV only
D) I, III and IV only


5. Finite insurance is reinsurance which

A) transfers the total risk at less cost than traditional reinsurance
B) transfers the total risk at the usual reinsurance price
C) transfers only a limited amount of risk at less cost than traditional reinsurance
D) transfers only a limited amount of risk at the usual reinsurance price


Solutions:

Question # 1
Answer: D
Question # 2
Answer: D
Question # 3
Answer: A
Question # 4
Answer: A
Question # 5
Answer: C

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