55 Questions (About 15 Questions on exam) Reference: 1. The nominal risk-free rate is best described as the sum of the real risk-free rate and a premium for: A. maturity. B. liquidity. C. expected inflation. C is correct. The nominal risk-free rate is approximated as the sum of the real risk-free interest rate and an inflation premium.…
Risk transfer is the process of passing on a risk to another party, often, but not always, in the form of an insurance policy. Risk Shifting
Risk Prevention and Avoidance Risk Acceptance: Self-Insurance and Diversification
Financial Risks Non-Financial Risks
Risk budgeting picks up where risk tolerance leaves off. Whereas risk tolerance focuses on the appetite for risk and what is and is not acceptable, risk budgeting has a more specific focus on how that risk is taken. Risk budgeting quantifies and allocates the tolerable risk by specific metrics; it extends and guides implementation of the…
An Enterprise View of Risk Governance
A risk management framework flows logically from the definition of risk management that was previously given: It is the infrastructure, process, and analytics needed to support effective risk management in an organisation. Despite customisation, every risk management system or framework should address the following key factors:
Risk, broadly speaking, is exposure to uncertainty. Risk is also the concept used to describe all of the uncertain environmental variables that lead to variation in and unpredictability of outcomes. More colloquially, risk is about the chance of a loss or adverse outcome as a result of an action, inaction, or external event. Risk exposure is…
