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Exam SCR topic 1 question 2 discussion

Actual exam question from GARP's SCR

Question #: 2
Topic #: 1

[All SCR Questions]

The risk team at an agricultural company in Easter Europe evaluates crop yield production performance. The evaluation reveals high temperature and water shortages will likely harm crop production, and current company insurance will not mitigate this exposure. The team recommends increasing coverage by purchasing an additional insurance policy that includes area yield protection.
According to the COSO ERM framework, which risk response strategy did the team recommend?

A. Pursuit
B. Sharing
C. Reduction
D. Acceptance

Show Suggested Answer

Suggested Answer: C 🗳️

by SolMak at April 19, 2023, 6:17 p.m.

Comments

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linaSCR

2 months, 2 weeks ago

Selected Answer: C

In a general manner, insurance is a risk mitigation, thus reduction (ex CDS in financial risk) So, I beleive C is the right answer

upvoted 1 times

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huanle

8 months, 3 weeks ago

Selected Answer: B

C is not correct, although risk reduction is one of the risk responses, but reduction focuses on improvements on processes, systems, or strategies, as opposed to creating new opportunities.

upvoted 2 times

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Gs2410

10 months, 1 week ago

Selected Answer: B

Insurance is Risk Sharing.

upvoted 2 times

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Kezanne

11 months, 3 weeks ago

Insurance in itself is risk sharing. increasing the insurance to include yield protection is risk REDUCTION. Answer is C

upvoted 1 times

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CecileC

1 year, 2 months ago

Selected Answer: B

From COSO's framework - "Sharing is a response that reduces the risk likelihood and impact by sharing a portion of the risk. An extremely common sharing response is insurance." So the answer should be B.

upvoted 1 times

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