P3 CIMA Risk Management Free Practice Exam Questions (2025 Updated)

M is updating the risk register for KRW, a listed company. KRW is a large multinational corporation operation. Which THREE of the following statements are correct?

A junior sales clerk at BCD, a wholesale jewellers, received an email which appeared to be from a well known parcel delivery company informing her that a delivery had been attempted outside office hours and had consequently failed She was asked to click on a link and complete some seemingly innocent but logical questions to effect the delivery on the next day She thought no more about it but was very surprised the next month to be awarded salesperson of the month as her sales had doubled

Unfortunately, on investigation it was found that this was as a result of several fraudulent orders for high-value items that had seemingly been placed by an existing customer but delivered to a new address, which turned out to be a temporary box number The existing customer's credit card had been fraudulently charged for these orders

Which of the following types of cyber-attack had the sales clerk been a victim of?

Company N is considering opening another production plant in Northland, a country 2000 km from its current production plant location N would also sell its products in Northland

Which TWO of the following are business risks'

B is a company with a strong risk appetite. Which of the following are benefits of using the certainty equivalent method of capital investment appraisal in B's case?

Achieving the budget is often used as a good performance measure. However, there are problems with budgets which may mean they are not always good measures of performance.

Which TWO of the following statements about budgets suggest that they should not always be used to measure performance?

J plc is a wholesale building supply business. It has a large warehouse where some of its materials are stored. Last month three accidents occurred where employees were slightly injured whilst moving items from the 5th shelf. The 5th shelf is located 15 metres up from the ground.

This is a health and safety risk and could also be a reputation risk in the longer term.

Which of the following risk mitigations should the company employ?

VBN is a multinational company that has 60 subsidiary companies that operate in 11 countries. VBN evaluates the performance of each subsidiary as an investment centre, using residual income to measure performance.

Which THREE of the following threats of dysfunctional behaviour may arise from VBN's use of residual income to measure subsidiaries' performance?

TLY sell building materials such as bricks sacks of concrete and paving slabs to builders Materials are kept in a large yard Customer orders are fulfilled by a team of 30 employees who use forklift trucks to move sold items to the loading bay, from where they are loaded onto lornes for dispatch to the customer The sales office prepares dispatch notes, which are used by the yard employees to identify the items that have been ordered

Which TWO of the following controls would be cost-effective ways to prevent the theft of inventory by TLY's staff?

Move the category of risk to the box beside the risk description it best matches.

P is a consulting firm that provides technical advice to the oil industry. The company has consulting teams that specialise in specific areas, namely drilling, off-shore, health and safety, oil well management and ng management. Each team's consultants are charged out to clients at the same daily rate.

The demand for different skill sets varies constantly due to factors such as movements in oil prices. Exploration increases when the oil price rises and there is a greater focus on maintaining existing wells when the price fans.

The performance of P's sales team is measured in terms of revenue, based on the number of consultancy days sold Frequently the sales team agree to contracts without first checking that the relevant consulting team has consultants available. The work then has to be undertaken by subcontractors at P's expense. Sub-contractors cost more and their use can also lead to P's own consultants being under-utilised when assignments could have been scheduled more efficiently.

Which TWO of the following would correct this behavior?

A US company enters into a five year borrowing with bank A at a floating rate of USD Libor plus 2%.

It simultaneously enters into an interest rate swap with bank B at 3.5% fixed against USD Libor plus 1%.

What is the hedged borrowing rate, taking the borrowing and swap into account?

Give your answer to 1 decimal place

R plc is considering an investment of $1,100,000 in a new machine which is expected to have substantial cash inflows over the next five years.

The annual cash flows from this investment and their probability are shown below:

Annual cash flow ($) Probability

 200,000                         0.4

 280,000                         0.5

 350,000                         0.1

At the end of its five-year life, the asset is expected to sell for $100,000. The cost of capital is 5%.

What is the Expected Net Present Value?

Give your answer to the nearest whole $.

ABC produces fashion garments for sale m its chain of high street retail outlets.

Which THREE of the following activities would result m the organisation having to review its cyber security risks management program?

VBN's home currency is the V$. On 1 January, VBN must make a payment of C$2 million on 31 March of that same year.

On 1 January the spot exchange rate was V$1 = C$0.4.

On 1 January VBN paid $180,000 for a call option to buy C$2 million for V$5.5 million on 31 March. VBN's cost of borrowing was 8% per year.

On 31 March the spot rate was V$1 = C$0.45.

What was the total cost, including the cost of the option, of settling the payable?

R is a manufacturer of biscuits. The market for biscuits is extremely competitive with many companies competing for contracts with large supermarkets. The intensity of the competition means that prices are kept low; and the buyers can demand higher levels of quality, and greater flexibility in supply arrangements.

Which of the following represent ways that the use of an Information System could help R to win and retain supermarket contracts in such a competitive market?

P Ltd, a service company, is seeking to recruit engineers to work in its maintenance division. Which TWO of the following suggestions will be most likely to help prevent fraud when recruiting the engineers?

AZX sells electrical components.

AZX's annual turnover is S24 million. Half of all sales are on 30 days' (1 month) credit

5% of credit sales have to be written off as unrecovered debt

25% of such write off is subsequently recovered through debt collection and legal action.

What is the expected loss each year due to credit risk?

JHG manufactures inexpensive cars that compete largely on price Its cars have very basic equipment and small but economical engines JHG's Board is considering launching a luxury brand of cars that will be far better equipped, more comfortable and have much better performance

Which THREE of the following would be relevant factors to incorporate into the stress testing of this new strategy to create a luxury brand?

A project has been evaluated on the basis that it will cost $14 million and will have a net present value of $2.3 million.

The project has commenced and $3 million of the initial $14 million has been invested. A problem has been discovered that will cost an additional $2.5 million to rectify. The $2.5 million will be payable immediately.

What is the NPV of continuing with this project?