Which of the following would be the BEST recommendation if the level of risk in the IT risk profile
has decreased and is now below management's risk appetite?
A
Explanation:
The level of risk in the IT risk profile is the aggregate measure of the likelihood and impact of IT-
related risks that may affect the enterprise’s objectives and operations.
The risk appetite is the amount and type of risk that the enterprise is willing to accept in pursuit of its
goals. It is usually expressed as a range or a threshold, and it is aligned with the enterprise’s strategy
and culture.
If the level of risk in the IT risk profile has decreased and is now below management’s risk appetite, it
means that the enterprise has more capacity and opportunity to take on additional risks that may
offer higher rewards or benefits.
The best recommendation in this situation is to optimize the control environment, which is the set of
policies, procedures, standards, and practices that provide the foundation for managing IT risks and
controls. Optimizing the control environment means enhancing the efficiency and effectiveness of
the controls, reducing the costs and complexity of compliance, and aligning the controls with the
enterprise’s objectives and values.
Optimizing the control environment can help the enterprise to achieve the optimal balance between
risk and return, and to leverage its risk management capabilities to create and protect value.
The other options are not the best recommendations, because they do not address the opportunity
to improve the enterprise’s performance and resilience.
Realigning risk appetite to the current risk level may result in missing out on potential gains or
advantages that could be obtained by taking more risks within the acceptable range.
Decreasing the number of related risk scenarios may reduce the scope and depth of risk analysis and
reporting, and impair the enterprise’s ability to identify and respond to emerging or changing risks.
Reducing the risk management budget may compromise the quality and reliability of the risk
management process and activities, and weaken the enterprise’s risk culture and
governance. Reference =
ISACA, CRISC Review Manual, 7th Edition, 2022, pp. 29-30, 34-35, 38-39, 44-45
ISACA, CRISC Review Questions, Answers & Explanations Database, 2022, QID 145
Senior management has asked the risk practitioner for the overall residual risk level for a process
that contains numerous risk scenarios. Which of the following should be provided?
D
Explanation:
Residual risk is the remaining risk after the risk response has been implemented. Residual risk can be
expressed as a combination of the probability and impact of the risk scenario, or as a single value
such as loss expectancy. Residual risk can be compared with the inherent risk, which is the risk level
before considering the existing controls or responses, to evaluate the risk reduction and value
creation of the risk response. Senior management has asked the risk practitioner for the overall
residual risk level for a process that contains numerous risk scenarios. The best way to provide this
information is to calculate the average of anticipated residual risklevels for each risk scenario, and to
present it as a single value or a range. This can help to provide a comprehensive and consistent view
of the residual risk exposure and performance of the process, as well as to align it with the
organization’s risk appetite and tolerance. The sum of residual risk levels for each scenario, the loss
expectancy for aggregated risk scenarios, or the highest loss expectancy among the risk scenarios are
not the best ways to provide the overall residual risk level, as they may overestimate or
underestimate the risk exposure and performance of the process, and may not reflect the actual risk
reduction and value creation of the risk response. Reference = Risk and Information Systems Control
Study Manual, Chapter 3, Section 3.2.2, p. 108-109
Which of the following BEST enables detection of ethical violations committed by employees?
D
Explanation:
Whistleblower Program:
Definition: A whistleblower program allows employees to report unethical or illegal activities within
the organization anonymously.
Detection of Ethical Violations: Employees are often in the best position to observe unethical
behavior. A well-structured whistleblower program encourages them to report such behavior without
fear of retaliation.
Anonymity and Protection: Providing anonymity and protection to whistleblowers increases the
likelihood that employees will report violations, thus enabling the organization to detect and address
ethical issues more effectively.
Comparison with Other Options:
Transaction Log Monitoring: While useful for detecting anomalies and potential fraud, it is not
specifically focused on ethical violations and may not capture all types of unethical behavior.
Access Control Attestation: This ensures that users have the correct access permissions but does not
directly detect unethical behavior.
Periodic Job Rotation: This can help prevent fraud by reducing the risk of collusion and providing
fresh perspectives on processes, but it does not directly detect ethical violations.
Best Practices:
Clear Reporting Channels: Ensure that the whistleblower program has clear and accessible reporting
channels.
Training and Awareness: Regularly train employees on the importance of reporting unethical
behavior and the protections offered by the whistleblower program.
Follow-up and Action: Ensure that reports are investigated thoroughly and appropriate actions are
taken to address verified violations.
Reference:
CRISC Review Manual: Emphasizes the importance of ethical behavior and the role of whistleblower
programs in detecting and addressing ethical violations within organizations.
ISACA Guidelines: Support the implementation of whistleblower programs as a key component of a
comprehensive risk management and ethical governance framework.
Which of the following is MOST likely to cause a key risk indicator (KRI) to exceed thresholds?
A
Explanation:
Occurrences of specific events are the most likely to cause a key risk indicator (KRI) to exceed
thresholds, as they represent the actual or potential realization of the risk. A KRI is a metric that
measures the level of risk exposure and the effectiveness of risk response strategies, and it has
predefined thresholds that indicate the acceptable or unacceptable risk status. When a specific event
occurs that affects the risk, such as a security breach, a system failure, or a compliance violation, the
KRI value may change and exceed the thresholds, triggering an alert or an action. A performance
measurement, the risk tolerance level, and risk scenarios are not the most likely to cause a KRI to
exceed thresholds, as they do not reflect the actual or potential occurrence of the risk, but rather the
expected or desired outcome, limit, or simulation of the risk. Reference = [CRISC Review Manual
(Digital Version)], page 121; CRISC by Isaca Actual Free Exam Q&As, question 217.
Which of the following criteria associated with key risk indicators (KRIs) BEST enables effective risk
monitoring?
C
Explanation:
Key risk indicators (KRIs) are metrics that help organizations monitor and assess potential risks that
may impact their operations, financial health, or overall performance1. KRIs should have certain
characteristics that make them effective for risk monitoring, such as:
Ability to measure the right thing (e.g., supports the decisions that need to be made)
Quantifiable (e.g., damages in dollars of profit loss)
Capability to be measured precisely and accurately
Relevant (measuring the right thing associated with decisions)2
Among the four options given, only option C (sensitivity to changes in risk levels) best enables
effective risk monitoring. This is because KRIs should be able to capture the changes in risk levels
over time and alert organizations to emerging or escalating risks3. A high sensitivity to changes in
risk levels indicates that theKRI is responsive and timely, and can help organizations take preventive
or corrective actions before the risks become too severe.
Reference = Key Risk Indicators: A Practical Guide, Key Risk Indicators: Examples & Definitions, Key
Risk Indicators - Wikipedia
Which of the following would present the MOST significant risk to an organization when updating the
incident response plan?
D
Explanation:
The most significant risk to an organization when updating the incident response plan is the
undefined assignment of responsibility. An incident response plan is a document that defines the
roles, responsibilities, procedures, and resources for responding to an incident that could disrupt the
normal operations of the organization, or compromise its assets, reputation, or compliance. An
incident response plan should clearly assign the responsibility for each task and activity involved in
the incident response process, such as detection, containment, analysis, eradication, recovery, and
reporting. Undefined assignment of responsibility could lead to confusion, duplication, conflict, or
omission among the stakeholders, and impair the effectiveness and efficiency of the incident
response process. Undefined assignment of responsibility could also increase the risk of escalation,
recurrence, or impact of the incident, and affect the accountability and performance of the
organization. Obsolete response documentation, increased stakeholder turnover, and failure to audit
third-party providers are also risks, but they are not as significant as undefined assignment of
responsibility, as they do not directly affect the execution and outcome of the incident response
process. Reference = CRISC Review Manual, 6th Edition, ISACA, 2015, page 130.
Which of the following would present the GREATEST challenge for a risk practitioner during a merger
of two organizations?
A
Explanation:
The greatest challenge for a risk practitioner during a merger of two organizations is the variances
between organizational risk appetites, as they may indicate a significant difference in the risk culture,
strategy, and objectives of the two organizations, and may require a complex and lengthy process of
alignment and integration. Different taxonomies to categorize risk scenarios, disparate platforms for
governance, risk, and compliance (GRC) systems, and dissimilar organizational risk acceptance
protocols are not the greatest challenges, as they are more related to the technical, operational, or
procedural aspects of risk management, rather than the strategicor cultural aspects of risk
management. Reference = CRISC Review Manual, 7th Edition, page 109.
Which of the following is the MOST important for an organization to have in place to ensure IT asset
protection?
A
Explanation:
To ensure IT asset protection, having procedures for risk assessments on IT assets is the most
important. These procedures enable an organization to systematically identify, evaluate, and
mitigate risks associated with its IT assets. This process is crucial for understanding thevulnerabilities
and threats that could potentially harm the assets and for implementing the necessary controls to
protect them.
Procedures for Risk Assessments on IT Assets (Answer A):
Importance: Regular risk assessments help in identifying vulnerabilities and threats to IT assets,
allowing the organization to prioritize and implement appropriate risk mitigation strategies.
Implementation: These procedures should be well-documented and regularly updated to reflect the
changing threat landscape and the organization's evolving IT infrastructure.
Outcome: Effective risk assessments ensure that IT assets are protected from potential risks, thereby
safeguarding the organization's data, systems, and overall IT environment.
Comparison with Other Options:
B . An IT asset management checklist:
Purpose: This helps in tracking and managing IT assets.
Limitation: It does not address risk assessment and mitigation directly.
C . An IT asset inventory populated by an automated scanning tool:
Purpose: Provides a detailed list of IT assets.
Limitation: While it helps in knowing what assets exist, it does not assess the risks associated with
those assets.
D . A plan that includes processes for the recovery of IT assets:
Purpose: Focuses on recovery after an incident.
Limitation: It is reactive rather than proactive in protecting assets.
Reference:
ISACA CRISC Review Manual, Chapter 2, "IT Risk Assessment", which emphasizes the need for
systematic risk assessments to manage and protect IT assets effectively.
Which of the following is the MOST reliable validation of a new control?
D
Explanation:
Internal Audit Review:
An internal audit review of control design involves a thorough examination of the control’s structure,
implementation, and effectiveness.
Auditors use a systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes.
Steps in Audit Review:
Understand Control Objectives:Auditors ensure that the control is designed to meet specific risk
management objectives.
Evaluate Implementation:Check whether the control has been implemented as designed.
Test Effectiveness:Perform tests to verify that the control operates effectively and consistently over
time.
Importance of Audit Review:
Provides independent and objective assurance that the control is appropriately designed and
functioning as intended.
Identifies any deficiencies or areas for improvement in the control design.
Comparing Other Validation Methods:
Senior Management Approval:Indicates support but does not validate effectiveness.
Documentation of Control Objectives:Important for understanding intent but not validation.
Control Owner Attestation:Provides insight but lacks the independence of an audit.
Reference:
The CRISC Review Manual highlights the role of internal audits in validating control design and
ensuring effective risk management (CRISC Review Manual, Chapter 3: Risk Response and
Mitigation, Section 3.9 Control Testing and Effectiveness Evaluation) .
After conducting a risk assessment for regulatory compliance, an organization has identified only one
possible mitigating control. The cost of the control has been determined to be higher than the
penalty of noncompliance. Which of the following would be the risk practitioner's BEST
recommendation?
A
Explanation:
•Risk acceptance is a status quo risk response, where the risk owner acknowledges the risk exists but
accepts it with minimal response1. Risk acceptance may be appropriate when the cost of other risk
responses exceeds the value that would be gained, or when the risk is below the risk acceptance
criteria2.
•Risk acceptance criteria are the criteria used as a basis for decisions about acceptable risk2. They
should be established before conducting a risk assessment, and they may be influenced by factors
such as utility, equality, technology, and risk perception2. Different organizations and countries may
have different risk acceptance criteria, depending on their context and values3.
•In this scenario, the organization has conducted a risk assessment for regulatory compliance, and
has identified only one possible mitigating control. However, the cost of the control is higher than
the penalty of noncompliance, which implies that the risk is below the risk acceptancecriteria.
Therefore, the best recommendation is to accept the risk with management sign-off, which means
that the management agrees to take the risk and is accountable for the consequences.
•Ignoring the risk until the regulatory body conducts a compliance check (option B) is not a good
recommendation, as it may expose the organization to legal, financial, or reputational damage.
Moreover, ignoring the risk may violate the principle of risk reduction, which states that risks should
be reduced wherever practicable2.
•Mitigating the risk with the identified control (option C) is not a good recommendation, as it may
not be cost-effective or efficient for the organization. The cost of the control is higher than the
penalty ofnoncompliance, which means that the organization would spend more resources than
necessary to reduce the risk. Moreover, mitigating the risk may not be aligned with the principle of
utility, which states that resources should be used as efficiently as possible for the society as a
whole2.
•Transferring the risk by buying insurance (option D) is not a good recommendation, as it may not be
feasible or beneficial for the organization. Transferring the risk means that the organization shifts the
responsibility or burden of the risk to another party, such as an insurer, a contractor, or a partner1.
However, transferring the risk does not eliminate the risk, and it may incur additional costs or
complications for the organization. Moreover, transferring the risk may not be possible or acceptable
for some types of regulatory compliance risks, such as those related to health, safety, or
environmental standards3.
Reference:
•Compliance risk assessments - Deloitte United States
•Compliance Risk Assessment [5 Key Steps] | Hyperproof
•Compliance Risk Assessments | Deloitte US
•Risk Acceptance Criteria: Overview of ALARP and Similar Methodologies as Practiced Worldwide
•Risk Assessment 4. Risk acceptance criteria - Norwegian University of Science and Technology
•Risk Acceptance - Institute of Internal Auditors