CIMA CIMAPRA19-P03-1 actual dump : CIMA Risk Management Exam

When a new computer system is being implemented there are several possible methods for managing the changeover from the old system to the new system.
Which THREE of the following are true?

• A. Parallel running involves keeping the old system running, normally until certain data retention criteria are met or confidence is gained, while the new system deals with the new workload. Data input is usually carried out on both systems.
• B. All methods of changeover carry high risk and it is the preparation, consideration of data compatibility and data cleansing before the changeover which has the biggest impact on the smoothness of the transition.
• C. Pilot changeover moves the simplest part of the business to the new system first.
• D. Phased changeover moves individual portions of the business to the new system one at a time.
• E. Phased changeover is the safest and slowest method of changeover.
• F. Direct changeover, or Big Bang is only used when the systems are significantly different such that comparing the outputs of the two systems is largely irrelevant.

Y Company wishes to recruit an employee who will have responsibility for the receipt and handling of cash From the point of view of the internal auditor which THREE of the following would be most likely to provide useful information about the candidate"?

• A. References from previous employers of the candidate.
• B. Confirmation that the candidate does not have a criminal record
• C. The candidate's membership of a professional body
• D. The candidate's academic qualifications.
• E. The candidate's personal referees

Smalltown had a problem with people parking cars on the town's mam shopping streets instead of in the nearby car parks The parked cars created congestion and made it difficult for delivery vehicles to unload Smalltown's local government had employed traffic wardens to enforce parking regulations by issuing parking fines to motorists who parked for more than the permitted 30 minutes.
The local government took further action to deal with this problem It banned parking on the busiest streets, it introduced parking charges in the remaining streets and it made it free to park m the town's car parks for up to two hours Fewer people now park cars on the streets because of the charges, but those who do generate significant revenues for the local government Fewer traffic wardens are required and so wage costs have reduced The local goverment auditors have decided to carry out a value for money audit of the parking system Which of the following is a measure of effectiveness?

• A. Revenues from parking have increased
• B. Parking enforcement costs less than before
• C. The remaining traffic wardens are less stressed because they no longer receive abuse by motorists.
• D. The main shopping streets are no longer congested

K plc is a large listed company in the retail industry. It has recently appointed T as a non-executive director. T has never had any previous involvement with K plc but is well known to K's Chief Executive P because T is the Managing Director of K plc's largest supplier.
K has recently expanded into Asi
a. Doubts about the wisdom of the move have been expressed in the financial press with some journalists commenting that it has exposed K plc to higher degrees of risk than previously. The move had been approved by the Risk Committee which consists of four Non-Executive Directors (NEDs) all of whom have significant experience in business.
K plc does not have a Nominations Committee. Nominations to the Board are usually proposed by P and generally agreed by the other directors.
In relation to the above scenario which of the following comments is valid?

• A. The Risk Committee should have rejected the proposal to enter the Asian market merely because it exposed K to greater risk than the other markets in which it operates.
• B. K plc is in line with best practice as it only has NEDs on its Risk Committee.
• C. There is no possible conflict of interest in relation to T's position as a NED and as Managing Director of a supplier company since, in both roles, he would clearly want K plc to prosper.
• D. The absence of a Nominations Committee exposes K plc to the risk that the Chief Executive may have unfettered power.

An oil company has entered into a joint venture with a competing oil company to develop a new oil field. The joint venture arrangement is intended to mitigate the risks associated with developing the oil field.
The following disclosure appears in the oil company's risk report:
"Many of our large projects and operations are conducted through joint ventures. These arrangements involve complex risk allocation and indemnification arrangements and we have less control over these activities than we would have if we had full ownership and control. Our partners may have economic or business interests that are opposed to ours, and may exercise the right to block key decisions or actions. We believe the joint arrangement is in our best interest." Which of the following statements are correct?

• A. The risk report means that the shareholders know exactly how bad the risk is.
• B. The shareholders now have more useful information.
• C. Now the shareholders know the directors are aware of the risk.
• D. If the risk report had not reported the risk the shareholders might not have been aware of the risk.
• E. The risk report says nothing useful about the risk.