When Announcing That an Enterprise Risk Management Program Would Be

question 56

Multiple Choice

When announcing that an enterprise risk management program would be implemented at XYZ Company,the president of the company observed,"We must overcome the silo mentality for the program to be successful." The "silo mentality" refers to

• A)over-emphasis on pure risks and ignoring speculative risks.
• B)using too much of one risk treatment measure and ignoring other risk treatment methods.
• C)focusing narrowly on one area and not viewing risk holistically.
• D)everyone assuming someone else is responsible for managing a risk and no one taking leadership.

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Definitions:

Bottlenecks

Refer to points of congestion in a production system that significantly slow down the overall process.

Variable Cost Concept

A concept used in applying the cost-plus approach to product pricing in which only the variable costs are included in the cost amount to which the markup is added.

Fixed Manufacturing Costs

Expenses related to the production process that do not vary with the volume of production, such as salaries of supervisors and rent of the factory.

Markup

The amount added to the cost of goods to cover expenses and generate profit.