SCR

SCR practice questions, page 5 of 6, with answer review and explanations.

Question 21

The risk team for a multinational company, that operates and franchises hotel and timeshare properties, prepares talking points for an upcoming business continuity plan meeting. A key area for discussion are the risks that can impact the company’s financial and reputational stability. The team recommends the company conduct climate-related scenario analysis and provides examples of scenarios and their use. Which of the following is correct for the team to include as part of the talking points?

  1. Scenario analysis should use a limited set of assumptions and constraints to reduce the risk of generalized scenario results.
  2. Scenario analysis allows a company to better understand its past performance by conducting a lookback analysis.
  3. A company can internally develop its models and scenarios or make use of existing publicly available scenarios.
  4. A company conducting scenario analysis should focus on either physical or transition risks to avoid inconsistent outcomes.

Question 22

A multinational footwear company prepares its annual GHG inventory. The company sustainability director organizes data according to the GHG Protocol and prepares a set of recommended actions to lower company emissions. Which action is the director most likely to recommend to reduce company Scope 3 emissions?

  1. Switch to suppliers located closer to textile printing and product finishing facilities.
  2. Replace company vehicles powered by petrol with electric vehicles and plug-in hybrids.
  3. Retrofit all existing manufacturing facilities with energy efficient standards.
  4. Upgrade air conditioning and other headquarters equipment to energy-efficiency models.

Question 23

At an international finance bank, a lack of staff clarity regarding sustainability, climate, and ESG definitions led to overlapping and inefficient initiatives. To minimize inefficiencies, the sustainability department develops new terminology for use across the bank. What should the department include in this new terminology?

  1. Sustainability issues fall exclusively within climate change impacts.
  2. ESG and sustainability risks are completely interchangeable.
  3. ESG risks are broader than all sustainability risks.
  4. Sustainability should include all governance and social risks.

Question 24

The CRO at a commercial bank in China examines the negative impact of climate-related physical risk on clothing manufacturer cash flows that subsequently lead to higher credit risk. The CRO observes which event leading to increased credit risk from climate physical risk?

  1. Decrease in production capacity due to higher labor absenteeism
  2. Disruptions in the raw material supply due to climate adaptation
  3. Rising costs of outdated manufacturing equipment write-offs
  4. Higher costs of adaptation to stricter new low-carbon standards

Question 25

A retail company operates internationally, and increasingly incurs scrutiny for environmental and social impacts. In response, the company adopts the SDGs. The company sustainability director begins this process by linking the SDGs to material concerns for the company. Which strategy should the director suggest the company take to directly address one of the SDGs?

  1. Disclose ESG factors to investors and stakeholders.
  2. Maximize profits from green forest bonds.
  3. Promote equitable access to water for surrounding communities.
  4. Ensure the company follows through on stated CSR commitments.