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Free CIMAPRA19-P03-1 Exam Braindumps
P3 Risk Management (Online) Questions 158–162 (page: 14)

Updated On: 1-Feb-2026
Page 14 of 56
PDF with 275 Questions

GHJ makes large export sales to customers in Country A, whose currency fluctuates significantly against GHJ's home currency. GHJ also makes large purchases from suppliers in Country

  1. All of these transactions are in Country A's currency.
    GHJ's Treasurer does not actively hedge currency risks because there is a natural hedge in place due to the company making both sales and purchases in the same currency.
    GHJ's Board has instructed the Treasurer to put active hedging measures in place because the Risk Report would otherwise have to disclose the fact that GHJ has a currency risk which is not actively hedged.
    Which of the following statements are correct?
  2. The Board may be concerned it will be criticised if it does not hedge.
  3. Risk reports can change behaviour.
  4. The Board does not want to be blamed for ignoring a risk.
  5. Risk reporting is a bad thing.
  6. Risk reporting drives the whole risk management process.

Answer(s): A,B,C



K plc is a large listed company in the retail industry. It has recently appointed T as a non-executive director. T has never had any previous involvement with K plc but is well known to K's Chief Executive P because T is the Managing Director of K plc's largest supplier.
K has recently expanded into Asi

  1. Doubts about the wisdom of the move have been expressed in the financial press with some journalists commenting that it has exposed K plc to higher degrees of risk than previously. The move had been approved by the Risk Committee which consists of four Non-Executive Directors (NEDs) all of whom have significant experience in business.
    K plc does not have a Nominations Committee. Nominations to the Board are usually proposed by P and generally agreed by the other directors.
    In relation to the above scenario which of the following comments is valid?
  2. K plc is in line with best practice as it only has NEDs on its Risk Committee.
  3. There is no possible conflict of interest in relation to T's position as a NED and as Managing Director of a supplier company since, in both roles, he would clearly want K plc to prosper.
  4. The Risk Committee should have rejected the proposal to enter the Asian market merely because it exposed K to greater risk than the other markets in which it operates.
  5. The absence of a Nominations Committee exposes K plc to the risk that the Chief Executive may have unfettered power.

Answer(s): D



Why is it potentially useful for an organisation to maintain a risk register?

  1. To ensure that recognised risks are adequately managed.
  2. To ensure that there are no undiscovered risks.
  3. To eliminate all recognised risks.
  4. To provide the risk manager with a role.

Answer(s): A



Which of the following statements are true of residual risk?

  1. Residual risk has to be accepted.
  2. Residual risk is the risk that remains after risk mitigation has taken place.
  3. If residual risk is too great then the company should not expose itself to the risk situation.
  4. Residual risk may be accepted if management feels the company can bear the risk.
  5. Residual risk should never be accepted.

Answer(s): B,C,D



J plc is a wholesale building supply business. It has a large warehouse where some of its materials are stored. Last month three accidents occurred where employees were slightly injured whilst moving items from the 5th shelf. The 5th shelf is located 15 metres up from the ground. This is a health and safety risk and could also be a reputation risk in the longer term.
Which of the following risk mitigations should the company employ?

  1. Transfer by insuring against this risk.
  2. Reduce by storing some items on the first three shelves and storing other items outside.
  3. Accept by just accepting this is a risk the company has to take and some employees may get injured.
  4. Avoid by sending the employees on a training course on Health and Safety.

Answer(s): B



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