GARP SCR Exam Dumps & Practice Test Questions

Question 1:

A climate scientist is preparing a presentation for policymakers on current climate change. 

Which observation should they include as direct evidence that human activities are causing recent changes in the climate?

A. Atmospheric CO2 levels have risen since the mid-20th century, with isotope signatures matching those of fossil fuel emissions.
B. Ice core data shows atmospheric CO2 increased by 135 parts per thousand since the Industrial Revolution.
C. Over the last 200 years, CO2 has caused most of the negative radiative forcing observed.
D. In the past century, the atmospheric lifetime of CO2 linked to energy consumption has increased.

Correct Answer: A

Explanation:

This question asks for a specific observation that links recent climate change directly to human activity, especially fossil fuel combustion. Identifying such evidence is crucial for distinguishing human-caused effects from natural variability in the climate system.

Option A is the most compelling evidence because it references isotopic analysis of atmospheric CO2. Carbon atoms come in different isotopes, and fossil fuels have a unique isotopic fingerprint—primarily depleted in carbon-14 and carbon-13 compared to atmospheric CO2 from natural sources. Scientists have observed that since the mid-20th century, atmospheric CO2 concentrations have risen sharply, and the isotopic signature matches fossil fuel emissions. This directly ties human burning of coal, oil, and natural gas to the increase in greenhouse gases causing climate change.

Option B notes the increase of atmospheric CO2 seen in glacial ice cores but does not establish the source of this increase. Although the data confirm rising CO2 levels over the Industrial Revolution, they do not by themselves prove that human activity is the cause, so this is less specific evidence for attribution.

Option C incorrectly suggests CO2 has caused "negative" radiative forcing (which would imply cooling). In reality, CO2 causes positive radiative forcing, contributing to warming. Also, this option fails to connect the rise in CO2 to human sources.

Option D discusses the atmospheric lifetime of CO2 but does not link the rise in CO2 levels specifically to fossil fuel use or human activity. The lifetime of CO2 reflects how long it stays in the atmosphere but does not serve as direct evidence of anthropogenic sources.

In summary, the unique isotopic signature of atmospheric CO2 matching fossil fuel emissions (Option A) provides the strongest, most direct evidence that human activity is driving recent climate change.

Question 2:

An agricultural company in Eastern Europe assesses risks to crop yields and finds that high temperatures and water shortages will likely reduce production. Since current insurance coverage is insufficient, the risk team suggests purchasing an additional policy with area yield protection. 

According to the COSO ERM framework, which risk response strategy does this recommendation represent?

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

Correct Answer: B

Explanation:

This question examines risk management responses per the COSO Enterprise Risk Management (ERM) framework, which outlines four main strategies: avoid, reduce, share, and accept risks. Each approach differs in how an organization deals with uncertainty and potential adverse outcomes.

Option B, sharing, is the correct classification. Risk sharing means transferring part or all of the risk to an external party, usually through contracts such as insurance, partnerships, or outsourcing. Here, the company’s risk team recommends buying additional insurance that covers area yield losses. This means the company is transferring some financial exposure related to weather-driven crop failures to the insurer. By doing so, the company mitigates its potential loss by sharing risk with a third party.

Option A, pursuit, is about seeking or increasing risk exposure to capture potential opportunities. This strategy does not fit here because the team aims to mitigate or manage risk rather than seek it out.

Option C, reduction, involves lowering the likelihood or impact of the risk through internal controls, process improvements, or mitigation measures. While insurance can mitigate financial impacts, it does not reduce the probability or physical occurrence of drought or heat stress. Therefore, the recommendation does not qualify as risk reduction in the COSO context.

Option D, acceptance, occurs when an organization consciously decides to tolerate risk without taking specific action, often because mitigation costs are too high or the risk is minor. Since the company is actively purchasing extra insurance, they are not accepting the risk passively.

Thus, purchasing additional insurance reflects the sharing strategy under COSO ERM, as it transfers risk to an insurer while enabling the company to continue operations with some protection from adverse climate impacts.

Question 3:

A city planning commissioner is consulting with climate scientists to evaluate how rising sea levels might affect key infrastructure projects. The scientists explain that sea level rise is fundamentally linked to greenhouse gas (GHG) emissions, no matter the specific warming scenario considered.

How should the scientists best characterize the relationship between sea level rise and GHG emissions?

A. Sea levels increase at a rate faster than GHG emissions.
B. Sea level rise occurs after a delay relative to GHG emissions.
C. Sea levels rise due to ocean acidification.
D. Sea level rise stops once global emissions reach their highest point.

Correct Answer: B

Explanation:

Understanding the connection between sea level rise and greenhouse gas emissions is critical in climate science, especially when predicting future impacts such as flooding and infrastructure risk. The key point is the timing and nature of this relationship.

Sea level rise lags GHG emissions because the processes that cause ocean levels to rise take significant time to develop. When greenhouse gases like CO2 are emitted, they increase the global temperature by trapping heat in the atmosphere. This warming then leads to the melting of glaciers and polar ice sheets, and to the thermal expansion of seawater—both of which contribute to rising sea levels. However, these physical changes do not happen instantly. The ocean and ice sheets respond slowly to the warming, meaning that sea levels continue to rise for many years—even centuries—after emissions have peaked. This delayed or lagging effect is a well-established scientific understanding.

The idea that sea levels rise faster than emissions (Option A) is incorrect. Sea level rise is a gradual process, influenced by long-term warming trends, and it does not increase proportionally or faster than emissions in the short term. Similarly, ocean acidification (Option C) is a different phenomenon caused by CO2 absorption that lowers the ocean’s pH, but it does not directly cause sea levels to rise. Lastly, sea level rise does not immediately stop once emissions peak (Option D) because the warming and melting processes already set in motion continue to impact sea levels long after emissions stabilize.

In summary, the fundamental relationship is that sea level rise lags behind greenhouse gas emissions, reflecting the delayed but persistent impact of climate change on ocean levels.

Question 4:

A national oil company is revising its 10-year business plan after experiencing operational disruptions caused by extreme summer and winter temperatures. The risk team is evaluating how both physical and human assets can withstand climate change. Early in the review, a team member stresses the need to plan for both sudden (acute) and long-term (chronic) climate hazards.

How should this team member explain the difference between acute and chronic climate hazards within the context of the 10-year strategy?

A. When choosing sites for future facilities, modeling local climate shifts requires more detailed data than modeling wildfire frequency.
B. When evaluating how heatwaves affect worker productivity, the frequency of heatwaves impacts the average temperature.
C. When examining offshore drilling risks, hurricane damage models show more agreement than sea level rise models.
D. When considering onshore asset impacts, flood forecasts are more reliable than projections of average rainfall changes.

Correct Answer: C

Explanation:

In climate risk planning, distinguishing between acute and chronic hazards is crucial. Acute hazards refer to sudden, high-impact events like hurricanes, floods, or heatwaves, while chronic hazards are gradual changes over time, such as sea level rise, temperature increase, or changing precipitation patterns.

Option C best illustrates the difference. Hurricanes are acute hazards—they occur suddenly, cause immediate damage, and their impacts can be observed clearly within short time frames. Because they are episodic and well-studied, models predicting hurricane damage tend to agree closely, showing more consensus among scientists. In contrast, sea level rise is a chronic hazard. It is a slow, persistent process influenced by many complex factors, including ice melt and ocean thermal expansion. Models of sea level rise generally show more variability and uncertainty due to the long timescales and complexities involved.

Option A focuses on data granularity for facility placement but doesn’t clearly distinguish acute versus chronic hazards. Option B mixes acute heatwave frequency with chronic average temperature, which may blur the difference rather than clarify it. Option D mentions flood and precipitation modeling accuracy but does not explicitly contrast acute versus chronic climate phenomena.

Recognizing that acute hazards like hurricanes have more predictable, immediate impacts and better-modeled damage compared to the gradual, less certain nature of chronic hazards like sea level rise is essential for effective risk management. This understanding helps the company plan for both immediate disruptions and longer-term climate changes over the next decade, ensuring resilience of assets and operations.

Question 5:

What would be the most effective recommendation a sustainability analyst might give to implement a company-wide framework that ensures transparency and accountability in sustainability claims?

A. Adhere to NGFS sustainability guidelines and confirm that company products and activities meet sustainability criteria through NGFS voluntary disclosures.
B. Apply the EU Taxonomy to classify products as “green” for the European market but create new classification standards for markets outside the EU.
C. Perform annual internal audits and report any detected greenwashing to government green finance task forces.
D. Enforce mandatory disclosures and marketing rules to guarantee that sustainability claims about products are truthful and not misleading.

Correct Answer: D

Explanation:

To establish an effective sustainability framework, it is crucial that a company ensures its claims regarding sustainable products are accurate, transparent, and comply with applicable standards. The strongest recommendation a sustainability analyst would provide is to mandate disclosures and marketing standards that prevent misleading or false claims, often referred to as “greenwashing.” This approach safeguards the company’s reputation and builds consumer trust while aligning with increasing regulatory expectations.

Option D highlights the importance of incorporating mandatory disclosures and clear marketing guidelines to guarantee that sustainability assertions are substantiated and transparent. This fosters accountability and reflects growing legal frameworks worldwide—such as the European Union’s Non-Financial Reporting Directive (NFRD)—which require companies to disclose sustainability information comprehensively. By ensuring claims are fair and truthful, the company mitigates risks associated with misleading consumers and regulatory penalties.

On the other hand, option A—following NGFS guidelines—is less comprehensive, as NGFS is more tailored to financial institutions and relies on voluntary disclosures, which may not satisfy regulatory or consumer demands for transparency. Option B suggests using the EU Taxonomy only within Europe while developing other systems for different regions, which risks inconsistency and confusion in sustainability messaging globally. Option C focuses on auditing and reporting greenwashing findings reactively but does not proactively prevent misleading claims through upfront marketing controls and mandatory disclosures.

In summary, option D is the most thorough and proactive approach to building a sustainable, trustworthy framework that meets both consumer expectations and regulatory requirements, making it the best choice for implementing a company sustainability framework.

Question 6:

A transportation company plans to upgrade its rail network by installing a system that reduces idle time to lower greenhouse gas emissions. To fund this, the company will issue green bonds starting in 2024. The sustainability director creates sustainability objectives and criteria to inform investors. 

Which fundamental Green Bond Principle is the director addressing?

A. The process for evaluating and selecting projects
B. Reporting on project impact and progress
C. Management of proceeds from bond issuance
D. Allocation and use of funds raised by the bonds

Correct Answer: A

Explanation:

The Green Bond Principles (GBP) provide a structured framework to ensure that green bonds finance projects with genuine environmental benefits. The principles consist of four core components: Use of proceeds, Process for project evaluation and selection, Management of proceeds, and Reporting. Each component ensures transparency, accountability, and credibility in green bond issuance and utilization.

In this scenario, the sustainability director’s task is to develop clear sustainability objectives and eligibility criteria that define which projects qualify for green bond funding. This directly corresponds to the “Process for project evaluation and selection” principle. Establishing this process is essential to ensure that only projects with measurable and verifiable environmental benefits—such as reducing greenhouse gas emissions by cutting rail idle time—are funded through the green bonds.

Option A fits best because it focuses on the criteria setting and evaluation process, which guides investors on how projects are chosen and confirms alignment with sustainability goals. This clarity builds investor confidence and ensures the company’s green bonds meet the intended environmental objectives.

Other options are less appropriate here: Option B refers to post-issuance reporting on funded projects’ outcomes, which occurs after projects are underway. Option C involves tracking the actual use of funds after bond issuance, which follows the director’s current role. Option D pertains to how funds are specifically used once allocated, but the director is still defining eligibility rather than handling fund disbursement.

Therefore, A is the correct answer because the sustainability director is creating the foundational framework for project eligibility, ensuring green bond financing supports genuinely sustainable projects aligned with the Green Bond Principles.

Question 7:

A major South American insurance company is expanding its climate scenario analysis approach. Previously, it used Representative Concentration Pathways (RCPs), but after hiring an actuary specializing in climate science, the company plans to incorporate Shared Socioeconomic Pathways (SSPs). 

How should the actuary advise the company to effectively use SSPs going forward?

A. Show that SSP and RCP trajectories often conflict in emissions trends.
B. Combine SSPs with various RCPs to evaluate climate policy options.
C. Gradually replace SSPs with RCPs by merging their underlying data assumptions.
D. Use SSPs as alternative emission pathways complementing RCPs.

Correct Answer: D

Explanation:

Incorporating climate scenario analysis is essential for insurance companies to better assess risks linked to climate change. The company initially used RCPs, which are greenhouse gas concentration trajectories used to predict climate outcomes. The actuary now needs to integrate SSPs, which differ from RCPs by describing plausible future socioeconomic pathways, such as population growth, economic development, and technological advances that influence emissions indirectly.

It’s important to understand that RCPs and SSPs are complementary tools, not contradictory. RCPs describe potential levels of radiative forcing based on emissions, whereas SSPs explore the underlying human and societal factors that could lead to those emissions. Therefore, SSPs offer a broader context, highlighting how different development paths impact emission trends.

Option A is incorrect because it suggests contradictions between RCPs and SSPs, which is misleading since these tools are designed to work in tandem. Option B suggests combining SSPs with various RCPs for policy analysis, which is feasible but more complex and not the initial step for integrating SSPs. Option C incorrectly suggests replacing SSPs with RCPs, ignoring their distinct but complementary roles.

The best advice is D: use SSPs to provide alternative emissions pathways that complement the existing RCPs. This approach enables the insurance company to evaluate a wider range of future scenarios by considering socioeconomic factors driving emissions, thereby enriching their climate risk analysis and improving strategic planning for long-term resilience.

Question 8:

A climate risk consultant is advising an Eastern European central bank on incorporating climate-related risks into its policies due to new regulations. The consultant references the Bank of England (BoE) as a leading example of integrating climate risks into bank supervision. 

Which BoE practice should the consultant recommend to the central bank?

A. Prioritize integrating climate-related risks into monetary policy before other banking operations.
B. Mandate a bottom-up approach where risk teams assess climate risks and boards approve or deny.
C. Require banks and insurers to include all material climate-related financial risks in capital adequacy and solvency evaluations.
D. Enforce strict climate risk disclosures precisely following NGFS guidelines.

Correct Answer: C

Explanation:

The Bank of England has been a pioneer in embedding climate-related risks into its financial oversight frameworks, especially focusing on bank and insurer resilience. One of the key measures the BoE has implemented is requiring financial institutions to incorporate climate-related risks into their capital adequacy and solvency assessments. This ensures that banks and insurers properly evaluate how climate change could affect their financial health, including asset valuations and liabilities, helping to maintain overall stability in the financial system.

Option C accurately reflects this practice, emphasizing the need for firms to recognize and account for all material climate risks when calculating capital buffers and solvency margins. This proactive integration helps institutions withstand potential shocks arising from climate-related financial risks, thus protecting the broader economy.

Option A is incorrect because the BoE has not prioritized integrating climate risks directly into monetary policy initially. Instead, the focus has been on financial stability and prudential regulation. Monetary policy integration is a longer-term objective.

Option B misrepresents the BoE’s approach, which favors a top-down governance model. The BoE expects boards of directors to take strategic ownership of climate risks rather than relying solely on risk teams, ensuring accountability at the highest levels.

Option D is inaccurate because while the BoE supports transparency in climate risk disclosures, it does not mandate strict adherence to NGFS guidelines alone. Instead, it aligns more broadly with frameworks like the Task Force on Climate-related Financial Disclosures (TCFD), allowing flexibility.

Therefore, the consultant should recommend that the central bank adopt BoE’s practice of requiring comprehensive inclusion of climate risks in capital and solvency evaluations to strengthen financial system resilience against climate change.

Question 9:

Which set of metrics would a sustainability analyst share with company executives to comprehensively cover the Environmental, Social, and Governance (ESG) aspects?

A. Carbon dioxide emissions; working conditions of farm laborers; diversity within the board of directors
B. Environmental health and safety records; compliance with ethical codes; organizational risk management policies
C. Water usage efficiency; employee satisfaction and retention rates; engagement with local communities
D. Energy consumption; reduction in greenhouse gas intensity; compensation of senior executives

Correct Answer: A

Explanation:

A sustainability analyst’s key role is to measure and report on ESG factors, which evaluate how a company manages its environmental footprint, social responsibilities, and governance structures. These metrics help stakeholders, including investors and regulators, understand the company’s sustainability performance and risk exposure.

Option A is the most comprehensive set that clearly aligns with the three ESG pillars:

• Environmental: Carbon dioxide emissions are a direct indicator of a company’s environmental impact, specifically its contribution to climate change. Reducing CO2 is fundamental in sustainability efforts.

• Social: Labor conditions of agricultural workers highlight how the company treats its workforce, particularly vulnerable groups. This metric reflects social responsibility concerning fair treatment, safety, and human rights.

• Governance: Board diversity refers to the variety in gender, ethnicity, and experience among directors. Diverse leadership is linked to better decision-making and stronger governance practices.

Option B addresses important but narrower areas: Environmental health and safety overlap environmental and social concerns, but don’t focus on key metrics like emissions. Ethical codes and risk management relate to governance but are more about internal compliance than externally reportable ESG data.

Option C contains relevant environmental and social indicators—water use efficiency and employee satisfaction—but lacks a clear governance metric, making it incomplete.

Option D has strong environmental metrics like energy use and GHG intensity, and mentions executive pay as a governance factor. However, executive compensation alone doesn’t fully capture governance quality, and the social aspect is missing.

In summary, A offers a balanced and relevant combination of ESG metrics covering environmental impact, social responsibility, and governance quality, which makes it the best choice.

Question 10:

A cement manufacturer joins an industry coalition lobbying governments to comply with the Paris Agreement’s climate goals by submitting Nationally Determined Contributions (NDCs). 

What is the coalition’s recommended approach to managing NDCs under this agreement?

A. Implement an initial NDC aligned with a 2°C temperature rise limit, then adopt a stricter 1.5°C limit in a subsequent round.
B. Set smaller-scale NDCs for 2019-2022 to adhere to the agreement’s ratchet mechanism.
C. Strengthen NDCs progressively and report on progress every five years during Conference of the Parties (COP) meetings.
D. Update NDC targets annually and submit them to the United Nations for approval.

Correct Answer: C

Explanation:

The Paris Agreement establishes a global strategy to combat climate change by requiring countries to set voluntary Nationally Determined Contributions (NDCs), which are commitments to reduce greenhouse gas emissions. A fundamental part of the agreement is the "ratchet mechanism," encouraging nations to regularly update and enhance their climate targets over time.

Option C correctly describes this process. The Paris Agreement mandates that countries review and submit updated NDCs every five years. These updates aim to progressively tighten emission reduction targets, helping keep global temperature rise well below 2°C, with efforts to limit warming to 1.5°C. The five-year interval coincides with COP meetings, where nations report their progress and negotiate future steps. This cycle ensures accountability and continuous improvement.

Option A incorrectly implies a fixed two-step process tied to specific temperature thresholds. The Paris Agreement does not require a first and second round with different warming limits but encourages ongoing enhancements to ambition over time.

Option B misunderstands the ratchet mechanism by suggesting smaller, less ambitious NDCs between 2019 and 2022. In reality, the ratchet mechanism is designed to increase ambition, not scale back efforts.

Option D is inaccurate because the agreement does not require annual revisions. Annual updates would be impractical and inconsistent with the five-year review framework that balances urgency with realistic timelines for planning and implementation.

In summary, the coalition would recommend C because it aligns with the Paris Agreement’s designed process for strengthening climate commitments in a structured, transparent, and measurable way.