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Exam Papers for Risk Management in BBA (With Answers)

PAPER # 1

**Duration: 2 hours**
**Instructions:**
- Answer all questions
...

- Please be concise and clear in your responses
...


**Section A: Multiple Choice Questions (20 marks)**

1
...
What is the primary purpose of a Risk Assessment Matrix?
a) To quantify all risks
b) To identify and prioritize risks
c) To eliminate all risks
d) To evaluate past risks
**Answer: b) To identify and prioritize risks**

3
...
What is a Risk Register?
a) A list of potential risks without any details
b) A detailed document outlining all project risks and their characteristics
c) A tool used for risk avoidance
d) A tool for risk acceptance
**Answer: b) A detailed document outlining all project risks and their characteristics**

5
...
Define "Operational Risk" in the context of financial risk management
...
This includes risks associated
with fraud, errors, disruptions, and compliance failures
...
List and briefly explain three strategies for managing credit risk
...
**

8
...
Qualitative risk analysis assesses risks
based on their subjective impact and likelihood without assigning specific values
...
Explain the concept of "Risk Retention" in risk management
...
This can involve setting
aside financial reserves to cover potential losses or accepting certain operational risks
as part of the business strategy
...
Discuss the importance of enterprise risk management (ERM) in modern
businesses
...
(20 marks)
**Answer: Enterprise Risk Management (ERM) is crucial for modern businesses as it
enables the proactive identification, assessment, and mitigation of risks across the
organization
...
For example, ERM can help companies
avoid catastrophic financial losses, comply with regulations, and seize opportunities,
such as entering new markets with calculated risks
...
Describe the steps involved in the risk management process, from risk identification
to risk monitoring and control
...
It
starts with identifying and categorizing potential risks, then assessing their probability
and impact
...
Monitoring and
control involve regularly reviewing and updating risk management strategies to ensure
they remain effective and relevant
...
Discuss the role of financial derivatives in managing market risk
...
(20 marks)
**Answer: Financial derivatives, such as futures and options, are commonly used to
manage market risk
...
For instance, a company can use
futures contracts to hedge against currency fluctuations when conducting international
business
...

These derivatives help companies reduce the uncertainty associated with market risk
and protect their financial positions
...

Section A: Multiple Choice Questions (10 marks)
1
...
The process of identifying, assessing, and mitigating risks is called:
(a) Risk management (b) Risk assessment (c) Risk mitigation (d) Risk monitoring
3
...
The process of continuously monitoring and evaluating risks and the
effectiveness of risk management strategies is called:
(a) Risk assessment (b) Risk mitigation (c) Risk monitoring (d) Risk governance
5
...
Explain the difference between strategic risk and operational risk
...
What are the three key steps in the risk management process?
3
...

4
...
Explain how risk management can help businesses to achieve their strategic
goals
...
Discuss the challenges of risk management in the global business environment
...
(d) Reputation risk is a type of strategic risk
...
(a) Risk management is the process of identifying, assessing, and mitigating
risks
...
(d) All of the above are examples of risk transfer
...
(c) Risk monitoring is the process of continuously monitoring and evaluating risks
and the effectiveness of risk management strategies
...
(d) Increased risk exposure is not a benefit of risk management
...
Strategic risk is the risk of failing to achieve business goals due to changes in the
external environment, such as changes in technology, customer preferences, or
government regulations
...

2
...
Risk identification: This involves identifying all of the potential risks that
could impact the business
...
Risk assessment: This involves evaluating the likelihood and impact of
each risk
...
Risk mitigation: This involves developing and implementing strategies to
reduce the likelihood or impact of each risk
...
The advantages of purchasing insurance as a risk transfer strategy include:
o It can provide financial protection against losses from unexpected events
...

o It can free up management resources to focus on other areas of the
business
...

o
o

It may not cover all types of risks
...


4
...

A process for monitoring existing risks and the effectiveness of risk
management strategies
...


5
...

o Protecting the business from financial losses
...

o Enhancing reputation and stakeholder confidence
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

The rapid pace of technological change
...

The increasing volatility of political and economic conditions
...





To overcome these challenges, businesses need to adopt a comprehensive and
integrated approach to risk management that takes into account all of the risks they
face, regardless of where they originate
...


7

PAPER # 3
Multiple Choice Questions
1
...
Financial risk

o

B
...
Strategic risk

o

D
...
Which of the following is the first step in the risk management process?
o

A
...
Assess risks

o

C
...
Monitor risks

3
...
Insurance

o

B
...
Hedging

o

D
...
Which of the following is a risk transfer strategy?

8

o

A
...
Captive insurance

o

C
...
All of the above

5
...
Risk reduction

o

B
...
Risk retention

o

D
...
D
2
...
D
4
...
C
Short Answer Questions
1
...

2
...
What are the steps in the risk management process?
4
...
What are the different risk transfer strategies?
Answers:
1
...

2
...
The steps in the risk management process are:
o

Identify risks

o

Assess risks

o

Treat risks

o

Monitor risks

4
...
The different risk transfer strategies include:
o

Insurance

o

Captive insurance

o

Hedging

Essay Questions
1
...

2
...

3
...

4
...

5
...

Answers:
1
...
By identifying, assessing, and treating
risks, organizations can minimize their impact on the business
...
The different types of risk management strategies include:
o

10

Risk reduction: This involves taking steps to reduce the likelihood of a risk
occurring
...


o

Risk retention: This involves keeping the risk within the organization
...


3
...


o

Assess risks: Once the risks have been identified, they need to be
assessed in terms of their likelihood and impact
...
This may involve reducing the risk, avoiding the
risk, retaining the risk, or transferring the risk
...


4
...
One example of a real-world risk management failure is the collapse of Enron in
2001
...
When these practices were exposed, the company's
stock price collapsed and the company filed for bankruptcy
...


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PAPER # 4
Instructions: Answer all questions
...
Which of the following is NOT a type of risk?
o

A
...
Tactical risk

o

C
...
Financial risk

o

E
...
The process of identifying, assessing, and responding to risks is known as:
o

A
...
Risk mitigation

o

C
...
Risk avoidance

o

E
...
Which of the following is an example of risk transfer?
o

A
...


o

B
...


o

C
...


o

D
...


o

E
...


4
...
Improved decision-making

o

B
...
Enhanced organizational performance

o

D
...
Reduced regulatory compliance costs

5
...
Identify risks

o

B
...
Respond to risks

o

D
...
Report on risks

True/False:
1
...
(False)
2
...
(False)
3
...
(False)
4
...
(False)
5
...
(True)
Short Answer:
1
...

2
...
What are the benefits of risk management?
4
...
List some examples of risk management strategies
...
Discuss the importance of risk management in business
...
Describe the different types of risk management strategies and how they can be
used to mitigate risk
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Explain the role of risk management in corporate governance
...
E

13

2
...
A
4
...
A
True/False:
1
...
False
3
...
False
5
...
Risk management is the process of identifying, assessing, and responding to
risks
...
The different types of risk include strategic risk, tactical risk, operational risk,
financial risk, and compliance risk
...
The benefits of risk management include improved decision-making, reduced
uncertainty, enhanced organizational performance, increased profitability, and
reduced regulatory compliance costs
...
The steps in the risk management process are:
1
...
Assess risks
3
...
Monitor risks
5
...
Some examples of risk management strategies include:

14

o

Risk avoidance

o

Risk reduction

o

Risk transfer

o

Risk acceptance

Essay:
1
...
This can help
companies to avoid or mitigate losses, improve their decision-making, and
enhance their overall performance
...
The different types of risk management strategies include risk avoidance, risk
reduction, risk transfer, and risk acceptance
...
Risk reduction is the strategy of reducing the
likelihood or impact of a risk
...
Risk
acceptance is the strategy of acknowledging and accepting a risk
...
Risk management plays an important role in corporate governance by ensuring
that risks are identified, assessed, and managed in a responsible and
transparent manner
...

PAPER # 5

**Section A: Multiple Choice Questions (20 marks)**

Instructions: Select the best answer for each question and mark your choice on the
answer sheet
...
Which of the following is NOT a primary type of risk in risk management?
a
...
Credit Risk
c
...
Physical Risk

2
...
Value at Return
b
...
Volatility at Risk
d
...
Risk assessment typically involves which of the following steps?
a
...
Risk measurement, risk transfer, and risk avoidance
c
...
Risk avoidance, risk diversification, and risk retention

4
...
To increase risk exposure
b
...
To reduce the impact of identified risks
d
...
In the context of financial risk management, what does the term "Hedging" refer to?
a
...
Accepting all financial risks without any actions
c
...
Speculating on financial markets

**Section B: Short Answer Questions (30 marks)**

6
...
"

7
...
How does
it work, and what benefits does it provide to investors?

8
...


9
...
What is the purpose of a "Risk Register"? How can it be used in the risk
management process?

**Section C: Essay Questions (50 marks)**

11
...
Provide examples of
different types of derivatives and how they can be used to manage financial risks
...
Analyze the impact of the COVID-19 pandemic on global risk management
strategies and practices
...
Select a specific industry (e
...
, banking, insurance, healthcare) and discuss the
unique risks it faces
...


14
...


**Answers:**
Answers to the multiple-choice questions should be straightforward, and you can refer
to your course materials for the correct responses
...


PAPER # 6

**Section A - Multiple Choice (20 points)**

1
...
Which of the following is not a common type of risk in business?
a) Financial risk
b) Operational risk
c) Marketing risk
d) None of the above

3
...
What is the primary goal of risk management?
a) Eliminating all risks
b) Maximizing profits
c) Minimizing the negative impact of risks
d) Accepting all risks

5
...
Which financial instrument is commonly used for hedging against foreign exchange
risk?
a) Options
b) Stocks
c) Bonds
d) Real estate

18

7
...
What risk management
technique is this an example of?
a) Risk avoidance
b) Risk retention
c) Risk diversification
d) Risk transfer

8
...
Which type of risk arises from changes in laws and regulations?
a) Market risk
b) Legal risk
c) Operational risk
d) Credit risk

10
...
Explain the concept of "risk appetite" in risk management
...
List and briefly describe the key components of an effective enterprise risk
management (ERM) framework
...
Define and provide an example of a strategic risk that a business might face
...
What is the purpose of a risk assessment matrix, and how is it typically used in risk
management?

Answer:

15
...
Provide an example of how diversification can reduce risk
...
b) Identifying, assessing, and mitigating risks
2
...
c) Risk transfer
4
...
a) Risk assessment
6
...
c) Risk diversification
8
...
b) Legal risk
10
...
Risk appetite is the level of risk a business is willing to take on to achieve its
objectives, while risk tolerance is the amount of risk that an organization is willing to
bear
...


12
...
An ERM framework
aims to integrate risk management into all aspects of an organization
...
Strategic risk is a risk that arises from decisions related to an organization's
strategic goals and objectives
...


14
...
It helps organizations focus on high-priority risks and determine
appropriate risk responses
...
Diversification involves spreading investments across different asset classes or
industries to reduce risk
...


PAPER # 7

**Section A: Multiple Choice Questions (10 marks)**
Choose the correct answer for each of the following questions
...


1
...
Credit risk
b
...
Operational risk
d
...
What is the primary goal of risk management?
a
...
To maximize profit
c
...
To ignore risk entirely
Answer: c

3
...
Putting all your investments in one asset
b
...
Ignoring investment options outside of stocks
d
...
The VaR (Value at Risk) model is used to:
a
...
Estimate the potential loss a portfolio could face at a certain confidence level
c
...
Predict market interest rates
Answer: b

5
...
Interest rate fluctuations
b
...
Employee fraud
d
...
Define credit risk and provide an example of a situation where credit risk may arise
...
An example of credit risk is when a bank lends
money to a company, and the company becomes insolvent, making it unable to repay
the loan
...
Explain the concept of risk appetite and its significance in risk management
...
It is significant in risk management because it helps in
setting boundaries for risk-taking, ensuring that risks align with the organization's
strategic goals and that risks are not taken beyond the acceptable limit
...
Describe the steps involved in the risk assessment process
...
Identification of risks
b
...
Prioritization of risks
d
...
Implementation of risk mitigation measures

9
...
(5
marks)

Answer: Hedging and diversification are two risk management strategies:
- Hedging involves using financial instruments (e
...
, options, futures) to reduce the
impact of specific risks, typically in the context of a single asset or liability
...

- Diversification, on the other hand, involves spreading investments across a range of
different assets or asset classes to reduce overall risk
...


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**Section C: Essay Questions (70 marks)**

10
...
Provide examples of
how financial institutions use risk management to mitigate various types of risk
...
Here are some examples of how
financial institutions use risk management to mitigate various types of risk:

- **Credit Risk Management**: Financial institutions assess the creditworthiness of
borrowers and implement credit risk management strategies to minimize the likelihood
of loan defaults
...


- **Market Risk Management**: Financial institutions are exposed to market risks due to
fluctuations in interest rates, exchange rates, and asset prices
...


- **Operational Risk Management**: Operational risks, such as fraud, system failures,
and human errors, can disrupt financial institutions
...


- **Liquidity Risk Management**: Financial institutions need to ensure they have
sufficient liquidity to meet their financial obligations
...


- **Compliance and Regulatory Risk Management**: Financial institutions must comply
with a myriad of regulations and laws
...

- **Reputation Risk Management**: Maintaining a positive reputation is essential for
financial institutions
...


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Risk management in the financial industry is an ongoing and dynamic process, adapting
to changes in the economic and regulatory environment
...


**End of Exam Papers**
Please note that these are a sample exam papers, and the answers provided are for
reference only
...


KEYWORDS:
1
...
BBA (Bachelor of Business Administration)
3
...
Previous Year Papers
5
...
Answers Included
7
...
Business Exams
9
...
Risk Mitigation
11
...
Risk Strategies
13
...
Sample Papers
15
...
Business Studies
17
...
BBA Examinations
19
...
Study Resources

25



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