PRMIA 8020 Exam Questions

Step 1: What Is a Risk Assessment Workshop?

A risk assessment workshop is a structured session where key stakeholders identify, evaluate, and prioritize risks.

Effective workshops require preparation, clear objectives, and structured discussions to ensure meaningful risk analysis.

Step 2: Why Option B is Correct

PRMIA and best practices recommend thorough preparation, including:

Setting objectives

Defining risk categories

Ensuring participation from risk, compliance, and business units

Providing risk assessment tools/templates

Step 3: Why the Other Options Are Incorrect

Option A ('Run spontaneously') Incorrect because lack of preparation leads to poor discussions and missed risks.

Option C ('Risk management should not attend') Incorrect because risk managers provide key expertise to guide discussions.

Option D ('Compliance experts should not attend') Incorrect because compliance provides regulatory insights essential to risk assessment.

PRMIA Risk Reference Used:

PRMIA Risk Assessment Framework -- Recommends structured, well-prepared workshops.

ISO 31000 Risk Management Standard -- Supports proactive workshop planning.

Final Conclusion:

Risk assessment workshops should be well-prepared to ensure meaningful discussions and effective risk identification, making Option B the correct answer.

Step 1: Key Elements of a Well-Designed Policy Document

A well-designed policy should include:

Scope -- Who the policy applies to.

Exception Handling -- How and where exceptions should be requested.

Accountability -- Who is responsible for enforcement.

Step 2: Why Option C is Correct

A policy must clearly define exceptions and the process for requesting them.

It should also define areas where the policy does not apply to avoid confusion.

Step 3: Why the Other Options Are Incorrect

Option A ('List of exceptions for board members' families') Incorrect because policies should apply consistently to all stakeholders.

Option B ('List of acceptable fonts and margin types') Incorrect because formatting is secondary to content clarity.

Option D ('To whom the policy applies and an additional management report') Incorrect because policy scope should not include unnecessary reports.

PRMIA Risk Reference Used:

PRMIA Policy Writing Guidelines -- Defines policy structure and exception handling.

ISO 19600 Compliance Management Standard -- Supports clear, well-documented policies.

Final Conclusion:

A well-designed policy clearly defines exceptions and their handling process, making Option C the correct answer.

Definition of an Effective Key Risk Indicator (KRI)

A KRI is a metric used to identify, measure, and monitor emerging risks.

To be effective, KRIs must be both quantitative and qualitative, allowing for a comprehensive risk view.

Key Characteristics of Effective KRIs

Quantitative -- Uses numerical data for trend analysis.

Qualitative -- Incorporates expert judgment and scenario-based insights.

Consistent -- Maintains uniform definitions across reporting periods.

Efficient & Repeatable -- Must be easily measured and consistently reported.

Why Other Answers Are Incorrect

Option

Explanation

B . Qualitative, Consistent, Efficient & Repeatable.

Incorrect -- Excludes quantitative aspects, which are essential for KRIs.

C . Quantitative, Consistent, Comparable, Efficient & Repeatable.

Incorrect -- While comparison is useful, qualitative factors are missing, making this answer incomplete.

D . Quantitative, Repeatable and Efficient.

Incorrect -- Lacks qualitative insights and consistency as key factors for KRIs.

PRMIA Reference for Verification

PRMIA Risk Indicator Guidelines

Basel Committee's Principles on Risk Data and KRI

Step 1: Definition of Material Customer Detriment

Material customer detriment refers to service disruptions that cause financial loss, inability to access essential services, or significant hardship.

PRMIA and UK FCA Operational Resilience Standards define 'significant harm' as going beyond inconvenience to include monetary or operational distress.

Step 2: Why Option D is Correct

Significant harm occurs when customers face tangible financial or service losses, not just reputational inconvenience.

Regulatory frameworks (e.g., Basel, FCA, PRMIA) require banks to protect customers from material disruptions.

Step 3: Why the Other Options Are Incorrect

Option A ('Low threshold, any complaint') Incorrect because not all complaints indicate material detriment.

Option B ('Inconvenience and reputational damage') Incorrect because true material harm is more than just inconvenience.

Option C ('Financial system resilience') Incorrect because this describes systemic financial stability, not customer impact.

PRMIA Risk Reference Used:

PRMIA Operational Resilience Framework -- Defines material customer detriment.

UK FCA Operational Resilience Guidelines -- Requires firms to minimize severe harm to customers.

Final Conclusion:

Material customer detriment involves actual financial hardship, not just inconvenience, making Option D the correct answer.

Step 1: What Is the Turnbull Report?

The Turnbull Report (1999) was a UK corporate governance report that set risk management expectations for boards.

It required companies to assess and manage risks effectively as part of corporate governance.

Step 2: Why Option C is Correct

Turnbull was the first report to mandate that boards must consider risk management in corporate governance.

This report established risk assessment as a board-level responsibility.

Step 3: Why the Other Options Are Incorrect

Option A ('Defined risk governance for insurance') Incorrect because Turnbull applied to all sectors, not just insurance.

Option B ('First report to propose board structure') Incorrect because corporate boards existed long before Turnbull.

Option D ('Led to the US Federal Reserve') Incorrect because the Federal Reserve was established in 1913, long before Turnbull.

PRMIA Risk Reference Used:

PRMIA Corporate Governance Guidelines -- Highlights Turnbull's role in board-level risk oversight.

UK Corporate Governance Code -- Turnbull contributed to defining board risk responsibilities.

Final Conclusion:

The Turnbull Report was the first to require boards to consider risks in corporate governance, making Option C the correct answer.