Multiple Choice
Which of the following statements about financial abuse and the fraud triangle is true?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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Which of the following would be a poor way for a business to manage uninsurable risks?
A
Implementing strong internal controls
B
Developing a risk management plan
C
Ignoring the risks and taking no preventive action
D
Training employees to recognize and report suspicious activities
Verified step by step guidance1
Understand the concept of uninsurable risks: These are risks that cannot be covered by insurance policies, such as reputational damage, regulatory changes, or certain operational risks.
Evaluate the options provided in the question: Each option represents a potential strategy for managing uninsurable risks.
Analyze the effectiveness of each option: Implementing strong internal controls, developing a risk management plan, and training employees to recognize and report suspicious activities are proactive measures that help mitigate uninsurable risks.
Identify the poor strategy: Ignoring the risks and taking no preventive action is a poor way to manage uninsurable risks because it leaves the business vulnerable to potential losses without any safeguards.
Conclude that businesses should adopt proactive measures to manage uninsurable risks rather than ignoring them, as this ensures better preparedness and resilience against unforeseen challenges.
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