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Choose The New 8020 Learning Materials, Pass The ORM Certificate - 2023 Update

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PRMIA 8020 Exam Syllabus Topics:

Topic
Details

Topic 1

Risk Management Framework: This section of the exam measures the skills of Risk Managers and covers the development and implementation of structured approaches for risk identification, evaluation, and mitigation. It includes industry-standard frameworks that guide risk strategy and decision-making. A key skill measured is establishing a risk management framework for organizations.

Topic 2

Case Studies: This section of the exam measures the skills of Business Risk Consultants and covers real-world applications of risk management concepts. It examines case studies on risk governance, assessment, and mitigation strategies across different industries. A key skill measured is analyzing historical risk events for strategic insights.

Topic 3

Risk Governance: This section of the exam measures the skills of Compliance Officers and covers the policies, structures, and processes that define how organizations oversee risk. It explores regulatory compliance, ethical considerations, and corporate governance frameworks to ensure accountability. A key skill measured is applying governance frameworks to organizational risk policies.

Topic 4

Risk Information: This section of the exam measures the skills of Risk Managers and covers the collection, analysis, and communication of risk-related data. It highlights the role of data-driven decision-making in mitigating uncertainties and ensuring compliance. A key skill measured is interpreting risk data for informed decision-making.

Topic 5

Insurance Mitigation: This section of the exam measures the skills of Insurance Risk Managers and covers strategies for transferring risk through insurance and other financial instruments. It focuses on risk transfer mechanisms, policy structuring, and claims management. A key skill measured is assessing risk transfer options through insurance.

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PRMIA ORM Certificate - 2023 Update Sample Questions (Q51-Q56):

NEW QUESTION # 51
The DORA act's full name is which of the following?

A. Digital Operational Resilience Act.
B. Digital Operational Risk Act.
C. Domain for Operational Risk Act.
D. Daily Operational Resilience Act.

Answer: A

Explanation:
Definition of DORA
The Digital Operational Resilience Act (DORA) is a regulation by the European Union (EU) aimed at strengthening the digital resilience of financial institutions.
It establishes a regulatory framework for managing information and communication technology (ICT) risks in the financial sector.
Key Objectives of DORA
Ensures that financial institutions can withstand, respond to, and recover from cyber threats and ICT-related disruptions.
Introduces standards for risk management, incident reporting, and third-party ICT risk oversight.
Why Other Answers Are Incorrect
Option
Explanation:
A . Domain for Operational Risk Act.
Incorrect - No such regulation exists under this name.
B . Digital Operational Risk Act.
Incorrect - The official name is Digital Operational Resilience Act (DORA).
C . Daily Operational Resilience Act.
Incorrect - DORA is not focused on daily operations but rather long-term digital resilience.
PRMIA Reference for Verification
PRMIA Risk Governance & Digital Resilience Standards
European Commission's Official DORA Regulation

NEW QUESTION # 52
For the WorldCom case, what was one of the causes of the failure?

A. The lack of a CRO during the final IPO.
B. Risk models that did not reflect loosened underwriting standards of mortgage originators.
C. A rapid pace of acquisitions and poor integration of acquired companies.
D. Unauthorized trading in derivatives.

Answer: C

Explanation:
Step 1: Understanding the WorldCom Case
WorldCom was one of the largest U.S. telecom companies before its collapse in 2002 due to fraudulent accounting practices and poor risk management.
The company expanded aggressively through acquisitions but failed to integrate them properly, leading to financial mismanagement and accounting fraud.
Step 2: Why Option C is Correct
WorldCom acquired over 60 companies in a short period without proper integration.
This masked financial problems and led to $11 billion in fraudulent accounting adjustments.
PRMIA and risk management frameworks stress that poor integration after rapid acquisitions increases operational and financial risks.
Step 3: Why the Other Options Are Incorrect
Option A ("Risk models and mortgage underwriting") → Incorrect because this describes the 2008 financial crisis, not WorldCom.
Option B ("Lack of a CRO during IPO") → Incorrect because WorldCom was well-established before its fraud-CRO absence was not the main issue.
Option D ("Unauthorized derivatives trading") → Incorrect because WorldCom's failure was due to fraudulent accounting, not derivatives.
PRMIA Risk Reference Used:
PRMIA Corporate Governance Guidelines - Discusses risks of poor post-merger integration.
SEC Investigation on WorldCom (2002) - Identified fraudulent accounting due to failed acquisitions.

NEW QUESTION # 53
Compliance departments traditionally provide policy, oversight, and set the standards for monitoring personal dealing. Which control below would assist in implementing such policies?

A. Outsourcing of the policy writing to an accounting firm at least once every 5 years.
B. A list of approved suppliers that have been added to the outsourcing policy.
C. Watch lists of stocks that are not allowed to be traded for a period of time, for instance, ahead of a securities offering that the firm is managing.
D. Outsourcing of the policy writing to an accounting firm at least once every 3 years.

Answer: C

NEW QUESTION # 54
For the Barings case study, segregation of duties was an issue. How did this present itself in this case?

A. A trader was responsible for managing the front-office.
B. A trader was responsible for managing the expense account.
C. A risk manager was responsible for managing the back-office
D. A trader was responsible for managing the back-office.

Answer: D

Explanation:
Background of the Barings Case Study
Nick Leeson, a trader at Barings Bank, caused the collapse of the institution due to unauthorized trading in derivatives.
A critical failure was the lack of segregation of duties, allowing Leeson to both execute trades (front-office) and oversee trade settlement (back-office).
How Segregation of Duties Failed
Proper segregation of duties ensures that no single individual has unchecked control over trading and settlement.
Leeson was responsible for both trading (front-office) and settlement (back-office), meaning he could hide losses without detection.
Why Answer A is Correct
A trader (Leeson) should never have been managing back-office functions.
His dual role allowed him to manipulate records and bypass controls, leading to $1.3 billion in losses and the bank's collapse.
Why Other Answers Are Incorrect
Option
Explanation:
B . A trader was responsible for managing the front-office.
Incorrect - Traders are supposed to manage the front-office; the issue was their involvement in back-office functions.
C . A risk manager was responsible for managing the back-office.
Incorrect - The issue was lack of oversight on the trader, not risk managers handling back-office duties.
D . A trader was responsible for managing the expense account.
Incorrect - The main issue was the trader's control over trade settlement, not expense accounts.
PRMIA Reference for Verification
PRMIA Case Study on Barings Bank Collapse
Basel Principles on Segregation of Duties in Risk Management

NEW QUESTION # 55
Which of the following best describes the role of the compliance department?

A. The compliance department is responsible for providing oversight over the first line's implementation of compliance risk management controls.
B. The compliance department is responsible for providing oversight over the board's implementation of compliance risk management controls.
C. The compliance department is responsible for implementing the first line's compliance risk management controls.
D. The compliance department is responsible for providing oversight over the auditor's implementation of compliance risk management controls.

Answer: A

Explanation:
Three Lines of Defense Model
The compliance department functions as the second line of defense, ensuring oversight over the first line's compliance controls.
It does not directly implement controls but monitors and advises on compliance risk management.
Responsibilities of the Compliance Department
Ensures regulatory compliance with laws, policies, and industry standards.
Monitors and enforces risk management controls within business operations.
Provides advisory and training on compliance risks.
Why Answer D is Correct
The first line of defense (business operations) is responsible for executing compliance controls.
The compliance department (second line) provides oversight and governance to ensure compliance adherence.
Why Other Answers Are Incorrect
Option
Explanation:
A . The compliance department is responsible for implementing the first line's compliance risk management controls.
Incorrect - The first line (business units) implement compliance controls, while compliance oversees.
B . The compliance department is responsible for providing oversight over the auditor's implementation of compliance risk management controls.
Incorrect - Internal audit is part of the third line of defense, not directly overseen by compliance.
C . The compliance department is responsible for providing oversight over the board's implementation of compliance risk management controls.
Incorrect - The board provides high-level governance; compliance ensures business adherence to regulations.
PRMIA Reference for Verification
PRMIA Governance & Compliance Oversight Framework
Basel Committee's Guidelines on Compliance Risk Management

NEW QUESTION # 56
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