An Organization Is Beginning to Implement an Enterprise Risk Management

question 380

Multiple Choice

An organization is beginning to implement an enterprise risk management program. One of the first steps is to develop a common risk language. Which of the following statements about a common risk language is true?

• A) Management will be able to reduce inherent risk because they will have a better understanding of risk.
• B) Internal auditors will be able to reduce their sample sizes because controls will be more consistent.
• C) Stakeholders will have more assurance that the risks are assessed consistently.
• D) Decision makers will understand that the likelihood of missing or ineffective controls will be reduced.

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Definitions:

Value Of The Good

The importance, worth, or usefulness of a good to consumers, often reflected in the price they are willing to pay.

Consumer Surplus

The contrast in the overall payment consumers have the willingness and fiscal capability to make for a good or service, compared to the payment they actually make.

Perfectly Price-Discriminating Monopoly

A theoretical market structure in which a monopolist charges each consumer the maximum they are willing to pay, capturing all consumer surplus.

Profit-Maximizing Level

The point at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.