What Is Enterprise Risk Management (ERM)

question 39

Multiple Choice

What is enterprise risk management (ERM) ?

• A) A process of evaluating internal controls to ensure operations are carried out efficiently and effectively
• B) A process designed to identify material events that may affect the financial statements and to manage risk within the entity's risk appetite
• C) A process, effected by an entity's board of directors, management, and other personnel designed to identify potential events that may affect the entity and to manage risk within its risk appetite
• D) A process by which compliance with laws and regulations can be assessed

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Definitions:

Variable Expenses

Costs that fluctuate in direct proportion to changes in the level of activity or business operations, such as materials and labor.

Fixed Expenses

Costs that do not change with the level of production or sales activity, such as rent, salaries, and insurance.

Financial Advantage

An economic benefit or superiority that a person or entity holds, giving them a better position in financial transactions or comparisons.

Fixed Expenses

Expenses that remain constant regardless of the volume of goods produced or sold within a specific time frame, like lease payments or wage bills.