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2. Answer: D
The first three are examples of where risk management can increase firm value. The last
one is invalid because eliminate projects with high volatility may eliminate projects with
extremely high payoffs.
3 Which of the following statements regarding risk and risk management is correct?
A. Risk management is more concerned with unexpected losses versus expected
losses.
B. There is a relationship between the amount of risk taken and the size of the
potential loss.
C. The final step of the risk management process involves developing a risk
mitigation strategy.
D. If executed properly, the risk management process may allow for risk elimination
within an economy.
3. Answer: A
Risk management is more concerned with the variability of losses, especially ones that
could rise to unexpectedly high levels or ones that suddenly occur that were not
anticipated (unexpected losses).
4 Which of the following statements regarding the role of the firm’s audit committee is
most accurate?
A. At least one member of the audit committee must possess sufficient financial
knowledge.
B. The audit committee may consist of some members of the management team.
C. The audit committee is only responsible for the accuracy of the financial
statements.
D. The audit committee is meant to work dependently with ：xuebajun888s
4. Answer: B
The audit committee consists primarily of non-management members but there may be
some management members. (., chief financial officer). The audit committee could
work with management members but should keep independent with them.
5 A board of directors is evaluating the implementation of a new ERM program at