CIMA CIMAPRO19-P03-1 Exam Practice Test Instant Access

Question 1

JC is a car manufacturing company in country C and manufactures diesel cars It is facing a number of serious risks Which TWO of the following nsk factors are external?

AJC's marketing director is considering an attractive job offer from one of J's main competitors

BCountry F, JC's main market, is threatening to impose tariffs on car imports

CJC is facing court action arising from injuries to customers caused by an alleged brake failure in one of its cars

DDiesel cars are being criticised by experts because it is believed they cause more harmful pollution than petrol

EJC's production staff are complaining that their wages are too low compared to wages paid to other employees.

Answer : B, D

Question 2

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

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

* 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

* 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

ANone of the executive directors should be allowed to sit on the Remuneration Committee

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

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

DM and N are both suitable appointees to the Audit Committee

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

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

Answer : A, D, F

Question 3

YY is a company which generates electricity from alternative energy sources It has just begun constructing a wind farm near a well-known beauty spot The protect has been controversial as campaigners say it will be noisy and unsightly.

The campaigners took legal action but lost the case Some of them have started a campaign of direct action against YY and are physically blocking roads leading to the site and attempting to intimidate YY's staff

YY has hired a security company to help it to protect its staff

Which of the following statements are view in relation to the ethics of this scenario''

Select ALL that apply.

AYY is within its rights to hire the security firm because it has duty of care to its employees

BThe security firm must take care not to use more force against the protestors than is absolutely necessary.

CYY no longer has any duty of care to the protestors since their actions are illegal because they lost their court case

DThe generation of electricity from clean renewable and sustainable sources is too important for the protestors' concerns to be considered

ESince the protestors have already lost their court case they would no longer be ethically justified in engaging in political lobbying to try to get the government to change the law in this area

Answer : A, B, D

Question 4

KLO is a major quoted car rental company The company is considering publishing its first cyber risk management report

AH rental bookings are made online Customers receive a booking reference number that they use to collect their cars from a convenient branch Customers enter their credit card details both so that KLO can take payment for their rental and also so that the customers can be charged automatically for late returns or damage to cars

KLO's management believes that it has three key areas of cyber risk Cyber criminals may wish to make bookings using fictitious data in order to steal KLO's cars, they may wish to use customers details to identify addresses of people who are away from home so that they can burgle houses and they may wish to abuse customer credit card details

KLO's Board is concerned that admitting to the nsk of stealing cars might encourage cnminals to exploit that vulnerability AJso. it is concerned that customers will be reluctant to rent cars if that would mean that their homes could be at risk of burglary while they are away The vulnerability of credit card details seems obvious and so the Board is not reluctant to admit to that.

Which TWO of the following are correct?

AThe Board should be clear about all sensitive information that the company holds, but should also be clear about the robust controls in place to safeguard that information.

BIf KLO's Board omits one of more areas of concern from the report then the independent accountant who will sign the report is unlikely to discover that omission

CThe independent accountant who will express an opinion on the risks and controls will be unwilling to sign the report unless it contains a full account of all risks and controls

DThe independent accountant's report on KLO's cyber risk management will refer only to those vulnerabilities that have been identified by KLO's Board

EStakeholders will not care about the vulnerabilities faced by KLO provided the independent accountant can confirm that the company has sound systems in place

Answer : A, C

Question 5

Which TWO of the following are NOT methods used for risk identification?

ACarrying out interviews on key members of staff

BDesigning a process to deal with complaints

CEmploying external advisors with specialist knowledge

DAccounting for waste in a manufacturing process

EBrainstorming ideas with colleagues from different disciplines within the business

Answer : B, E

Question 6

Which of the following are the Committee of Sponsoring Organisations (COSO) key principles of enterprise risk management?

Select ALL that apply.

AConsideration of the main risk only which is financial risk

BThe creation of a risk aware culture

CRisk management is the responsibility of the risk committee

DConsideration of risk management in the context of business strategy

EA comprehensive and holistic approach to risk management

Answer : B, D, E

Question 7

IOP manufactures aircraft engines. The company is presently engaged in a scenario planning exercise to consider the implications of a possible ban on the use of fossil fuels by the year 2040.

Which TWO of the following would be realistic responses to the scenario?

AWork with politicians to discredit the proposed restrictions on the use of fossil fuels

BCommission research into the development of battery-powered aircraft

CAdapt existing engine designs so that they can use plant-based fuels, such as vegetable oils

DDispose of manufacturing plant and move into more sustainable transport, such as electric trains

EDevelop more efficient engines that minimise the use of fossil fuels

Answer : B, C

CIMAPRO19-P03-1 P3 Risk Management Exam Practice Test