Isaca CRISC Certified in Risk and Information Systems Control Exam Dumps and Practice Test Questions Set 15 Q211 — 225
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Question 211
An organization has implemented a new risk management framework. What is the BEST way to measure its effectiveness?
A) Count the number of risk assessments conducted
B) Evaluate whether risk-based decisions improve business outcomes
C) Measure the size of the risk register
D) Track the number of policies created
Answer: B
Explanation:
Evaluating whether risk-based decisions improve business outcomes represents the most meaningful measure of risk management framework effectiveness because the ultimate purpose of risk management is enabling better decision-making that supports organizational objectives while managing uncertainty. Outcome improvement demonstrates that the framework delivers tangible value rather than merely creating process overhead or documentation.
Effective risk management frameworks should result in observable improvements such as fewer unexpected losses from materialized risks, better resource allocation through prioritized risk treatment, reduced severity of incidents due to proactive controls, improved project success rates through early risk identification, enhanced reputation from avoiding major risk events, and competitive advantages from calculated risk-taking aligned with strategy. These outcomes validate that risk management produces benefits exceeding its costs.
Measuring outcome improvements requires establishing baseline metrics before framework implementation and tracking them over time. Relevant metrics might include incident frequency and severity, project failure rates, customer satisfaction scores, regulatory compliance levels, financial losses from risk events, or strategic objective achievement rates. Demonstrating positive trends in these business-relevant measures validates framework effectiveness more convincingly than process compliance metrics.
Counting risk assessments measures activity not effectiveness. Assessment quantity does not indicate quality or whether findings influence decisions. Risk register size similarly measures volume not value as large registers may simply catalog trivial risks without improving decisions. Policy creation counts documentation not impact. While these metrics indicate framework activity, only evaluating business outcome improvements demonstrates whether the framework achieves its fundamental purpose of enabling better risk-informed decisions that advance organizational success.
Question 212
Which of the following is the MOST important factor when determining risk ownership?
A) The person with the most technical knowledge
B) The individual with authority to accept the risk and allocate resources
C) The person who identified the risk
D) The chief risk officer by default
Answer: B
Explanation:
Authority to accept risk and allocate resources represents the critical factor for risk ownership because effective risk management requires owners who can make binding decisions about risk responses and commit organizational resources to implement those decisions. Risk owners must possess sufficient organizational authority to take action rather than merely monitoring or reporting risks without ability to influence outcomes.
Risk ownership carries specific responsibilities including understanding the risk and its potential impacts, evaluating risk response options and selecting appropriate strategies, ensuring risk treatments are implemented effectively, monitoring risk levels and control effectiveness, reporting risk status to governance bodies, and accepting residual risk on behalf of the organization. These responsibilities require decision-making authority commensurate with the risk magnitude and resources needed for treatment.
Appropriate risk owners typically are managers of the business processes or assets exposed to the risk because they understand operational context, control resource allocation for their areas, and have accountability for outcomes. For enterprise-level risks, ownership may reside with executives who have authority spanning multiple business units. The key principle is matching ownership to the organizational level where decisions can actually be made and executed.
Technical knowledge is valuable but insufficient without authority to act on that knowledge. Risk identifiers may lack the organizational position to own risks they discover. Defaulting all risks to the chief risk officer concentrates ownership inappropriately as the CRO coordinates risk management but cannot own all organizational risks. Only individuals with authority to accept risk and allocate resources possess the decision-making power and accountability alignment necessary for effective risk ownership that translates risk awareness into risk action.
Question 213
An organization’s risk appetite statement should be PRIMARILY driven by which of the following?
A) Industry benchmarks
B) Organizational strategy and objectives
C) Competitor practices
D) Historical risk events
Answer: B
Explanation:
Organizational strategy and objectives must primarily drive risk appetite because risk appetite defines how much uncertainty the organization is willing to accept in pursuit of its goals. The relationship between strategy and risk appetite is fundamental as different strategic choices inherently involve different risk profiles, and risk appetite must align with strategic direction to enable rather than obstruct strategy execution.
Organizations pursuing aggressive growth strategies typically require higher risk appetite to support innovation, market expansion, and competitive positioning. Conversely, organizations focused on stability, preservation of capital, or operating in highly regulated environments may adopt conservative risk appetites emphasizing protection over growth. The risk appetite statement translates strategic intent into practical guidance for decision-making about which risks to accept, which to avoid, and how much risk is appropriate.
Risk appetite alignment with strategy ensures consistency between what the organization says it wants to achieve and what level of uncertainty it will tolerate in pursuit of those achievements. Misalignment creates dysfunction where strategy demands risk-taking that risk appetite prohibits, or where risk appetite allows exposures inconsistent with strategic priorities. Regular review ensures risk appetite evolves as strategy changes over time.
Industry benchmarks provide context but each organization’s unique strategy requires tailored risk appetite. Competitor practices may not align with different strategic choices. Historical events inform risk understanding but should not solely determine future appetite. While these inputs provide valuable perspective, only organizational strategy and objectives provide the fundamental basis for determining how much risk is appropriate. Risk appetite must serve strategy by enabling the organization to pursue its chosen path while managing uncertainty within acceptable bounds.
Question 214
What is the PRIMARY reason for establishing key risk indicators?
A) To comply with audit requirements
B) To provide early warning signals of changing risk levels
C) To reduce insurance premiums
D) To eliminate all organizational risks
Answer: B
Explanation:
Providing early warning signals of changing risk levels represents the fundamental purpose of key risk indicators because KRIs enable proactive risk management by detecting risk condition deterioration before risks materialize into incidents, losses, or missed objectives. This forward-looking monitoring allows organizations to intervene with preventive actions rather than merely responding after problems occur.
Effective KRIs monitor leading indicators that signal increasing risk exposure through measurable changes in relevant conditions. For cybersecurity risks, KRIs might track trends in phishing attempts, unpatched vulnerabilities, or failed authentication attempts. For operational risks, KRIs might monitor error rates, staff turnover, or training completion. For financial risks, KRIs might track concentration levels, market volatility, or covenant compliance ratios. These metrics provide advance notice when conditions trend toward higher risk.
KRI programs establish threshold levels that distinguish normal fluctuations from significant changes warranting management attention. When indicators breach warning thresholds, escalation procedures ensure appropriate stakeholders receive alerts enabling timely response. Regular monitoring at frequencies matching risk velocity ensures organizations detect changes quickly enough to act before risks materialize. Dashboard presentations support efficient monitoring across multiple risk domains.
Audit compliance may be a benefit but is not the primary purpose of KRIs. Insurance premium impacts are incidental outcomes not the driving objective. Eliminating all risks is impossible and not the purpose of monitoring. While these may represent secondary benefits, only providing early warning signals fulfills KRIs’ core purpose of enabling proactive risk management through advance detection of deteriorating risk conditions that allows preventive intervention before adverse events occur.
Question 215
An organization is evaluating whether to pursue a high-risk, high-reward business opportunity. What should be the PRIMARY consideration?
A) Whether competitors are pursuing similar opportunities
B) Alignment with risk appetite and strategic objectives
C) The cost of insurance coverage
D) Historical success rates of similar ventures
Answer: B
Explanation:
Alignment with risk appetite and strategic objectives must be the primary consideration because this alignment determines whether the opportunity fits within the organization’s fundamental purpose and acceptable uncertainty levels. High-risk opportunities should only be pursued when they advance strategic priorities and the associated risks fall within the organization’s stated willingness to accept uncertainty in exchange for potential rewards.
Strategic alignment ensures the opportunity contributes to organizational objectives rather than representing a distraction consuming resources without advancing core goals. Even lucrative opportunities may be inappropriate if they divert attention from strategic priorities, require capabilities outside organizational competencies, or expose the organization to risk categories it is not equipped to manage. The decision must consider whether potential rewards justify risks specifically within the context of what the organization is trying to achieve.
Risk appetite alignment examines whether the opportunity’s risk profile fits within established tolerance levels across relevant risk dimensions including financial exposure, reputation impact, regulatory compliance, operational complexity, and resource commitment. If potential losses exceed risk appetite even though potential gains are attractive, the opportunity is inappropriate regardless of its merits in isolation. The organization must be willing and able to absorb potential adverse outcomes.
Competitor actions provide market intelligence but should not drive strategy since each organization has unique capabilities and risk capacity. Insurance costs are a factor in overall analysis but do not determine fundamental appropriateness. Historical success rates inform probability assessments but do not determine whether this organization should pursue this opportunity. Only alignment with risk appetite and strategic objectives addresses the fundamental questions of whether the opportunity advances organizational purpose within acceptable risk bounds.
Question 216
Which of the following BEST describes the relationship between inherent risk and residual risk?
A) They are always equal
B) Residual risk is what remains after controls are applied to inherent risk
C) Inherent risk is always lower than residual risk
D) They are unrelated concepts
Answer: B
Explanation:
Residual risk representing what remains after controls are applied to inherent risk accurately describes the fundamental relationship between these concepts in risk management frameworks. Inherent risk reflects the level of risk existing before any controls or mitigating actions, while residual risk reflects the remaining exposure after controls reduce the risk to a managed level.
Inherent risk assessment examines the natural level of risk associated with a process, system, or activity assuming no controls exist. This assessment considers the likelihood and impact of risk events in an uncontrolled state, providing a baseline understanding of the exposure requiring management. Inherent risk levels inform decisions about what level of control investment is appropriate, with higher inherent risks typically justifying more substantial control frameworks.
Control implementation reduces inherent risk by decreasing likelihood of risk events, limiting impact magnitude if events occur, or both. The effectiveness of controls determines how much inherent risk is reduced. Highly effective controls substantially reduce residual risk levels while less effective controls leave higher residual exposures. Control gaps or failures may leave residual risk approaching inherent risk levels.
Residual risk may approach zero with extremely effective controls but typically remains at some level as perfect risk elimination is rarely achievable or cost-effective. The concepts are clearly related rather than unrelated or equal. Inherent risk is by definition higher than or equal to residual risk since controls reduce rather than increase risk. Understanding this relationship enables organizations to evaluate whether control frameworks adequately reduce risks from inherent levels to residual levels within risk appetite and tolerance thresholds.
Question 217
An organization wants to implement continuous control monitoring. What is the PRIMARY benefit of this approach?
A) Eliminating the need for periodic audits
B) Real-time identification of control failures or weaknesses
C) Reducing staff headcount
D) Guaranteeing zero defects
Answer: B
Explanation:
Real-time identification of control failures or weaknesses represents the primary benefit of continuous control monitoring because this approach provides ongoing visibility into control effectiveness rather than periodic snapshots, enabling immediate detection and response to control issues before they result in significant risk events or losses. Continuous monitoring transforms control assurance from retrospective validation to proactive management.
Continuous monitoring leverages automated tools and technologies to constantly evaluate whether controls are operating as intended by analyzing log files, transaction data, configuration states, and system outputs. Automated analysis can identify anomalies, policy violations, control gaps, or effectiveness degradation much faster than manual periodic reviews. Alert mechanisms notify appropriate personnel when monitoring detects issues requiring attention.
The real-time or near-real-time nature of continuous monitoring dramatically reduces the window between control failure and detection. Traditional periodic assessments may not discover control issues until weeks or months after they occur, during which time the organization remains exposed to elevated risk. Continuous monitoring collapses this gap, enabling rapid response that minimizes exposure duration and potential impact.
Continuous monitoring complements rather than eliminates audit needs as audits provide independent validation and broader risk perspective beyond control monitoring. Staff reduction is not the purpose and continuous monitoring may actually require skilled personnel to design monitoring programs and respond to alerts. Zero defects is an unrealistic guarantee as monitoring detects but does not prevent all control failures. Only real-time identification of control issues fulfills continuous monitoring’s core value proposition of providing ongoing control effectiveness visibility enabling proactive issue resolution.
Question 218
What is the MOST important consideration when developing risk scenarios for assessment purposes?
A) Using only historical incidents
B) Ensuring scenarios are plausible and relevant to the organization
C) Creating as many scenarios as possible
D) Focusing only on high-probability events
Answer: B
Explanation:
Ensuring scenarios are plausible and relevant to the organization represents the critical consideration because risk scenarios must reflect realistic threats and vulnerabilities that could actually affect the organization to provide meaningful assessment results that inform practical risk management decisions. Scenarios that are implausible or irrelevant to organizational context waste resources and produce risk assessments disconnected from actual risk exposure.
Plausible scenarios are grounded in realistic threat vectors, credible attack methods, and vulnerabilities actually present in organizational systems or processes. Plausibility does not mean events must be common or have historical precedent, but rather that conditions exist that could reasonably lead to the scenario occurring. Emerging threats or novel attack techniques may be plausible even without organizational history if threat intelligence indicates adversaries are developing these capabilities.
Relevance ensures scenarios address risks that matter to the specific organization considering its industry, business model, technology environment, geographic locations, and regulatory context. A scenario highly relevant to financial services may be irrelevant to manufacturing. Scenarios should reflect the organization’s actual attack surface, data types, process dependencies, and threat actor interest. Tailoring scenarios to organizational context produces assessments that guide appropriate rather than generic risk responses.
Using only historical incidents ignores emerging threats and provides backward-looking perspective. Creating excessive scenarios without prioritization dilutes focus and resources. Focusing only on high-probability events ignores high-impact low-probability scenarios that may represent the most significant risks. While these approaches have some merit, only ensuring plausibility and relevance produces scenario-based assessments that accurately reflect organizational risk landscape and inform practical risk management strategies aligned with actual exposure.
Question 219
An organization discovers that a critical vendor lacks adequate cybersecurity controls. What is the BEST immediate action?
A) Terminate the vendor relationship immediately
B) Assess the risk exposure and implement compensating controls if needed
C) Ignore the issue if service has been satisfactory
D) Wait for the vendor to fix the issue without intervention
Answer: B
Explanation:
Assessing risk exposure and implementing compensating controls if needed represents the appropriate immediate action because this approach balances the reality that vendor relationships cannot always be terminated immediately with the need to protect organizational assets and data while vendor security improvements are pursued. The assessment determines actual risk magnitude and informs proportionate response strategies.
Risk exposure assessment examines what data the organization shares with the vendor, what access the vendor has to organizational systems, what services the vendor provides and their criticality to operations, how the vendor’s security deficiencies could affect the organization, and what alternative vendors or service delivery options exist. This analysis quantifies the risk and identifies the most significant exposure areas requiring immediate attention.
Compensating controls provide interim risk reduction while longer-term solutions are developed. Options include restricting vendor access to only necessary systems and data, implementing additional monitoring of vendor activities, requiring data encryption for information shared with vendors, conducting more frequent security assessments, establishing incident response procedures specific to vendor-related incidents, or implementing technical controls that reduce organizational exposure to vendor security weaknesses.
Immediate termination may not be feasible if the vendor provides critical services lacking readily available alternatives, and may be disproportionate if risks can be managed through other means. Ignoring security deficiencies exposes the organization to unacceptable risk. Passive waiting without protective actions leaves the organization vulnerable. Only assessing exposure and implementing compensating controls provides the balanced approach of addressing immediate risk while working toward comprehensive solutions through vendor security improvement or eventual transition to alternative providers.
Question 220
Which of the following is the PRIMARY purpose of risk aggregation in enterprise risk management?
A) To reduce the total number of identified risks
B) To understand cumulative risk exposure across the organization
C) To eliminate redundant risks
D) To simplify risk reporting
Answer: B
Explanation:
Understanding cumulative risk exposure across the organization represents the fundamental purpose of risk aggregation because individual risk assessments may not reveal the total exposure when multiple risks interact, concentrate, or accumulate to create enterprise-level vulnerabilities. Aggregation provides the holistic view necessary for understanding whether the organization’s total risk portfolio remains within acceptable bounds.
Risk aggregation examines how individual risks combine to create total organizational exposure. Multiple moderate risks affecting the same business area may aggregate to create significant cumulative impact. Risks that appear manageable in isolation may create unacceptable exposure when considered together. Common dependencies or causes may mean apparently separate risks are actually correlated and likely to materialize together rather than independently.
Aggregation also reveals risk concentrations where multiple exposures cluster in particular business units, geographic regions, product lines, or dependency relationships. These concentrations may indicate where risk mitigation should be prioritized or where diversification strategies could reduce overall exposure. Understanding concentration helps prevent scenarios where single events trigger multiple risk materializations due to common underlying causes or dependencies.
Risk aggregation does not reduce the number of risks but rather combines them for comprehensive analysis. Eliminating redundancy is administrative cleanup not the primary purpose. Simplifying reporting may be a benefit but is not the fundamental objective. While these outcomes may result from aggregation activities, only understanding cumulative exposure fulfills aggregation’s core purpose of providing enterprise-level risk perspective that reveals whether total organizational risk exposure remains within risk appetite despite individual risks appearing acceptable in isolation.
Question 221
An organization is implementing a new risk management information system. What is the MOST critical success factor?
A) Selecting the most expensive system available
B) Ensuring the system supports risk management processes and decision-making needs
C) Implementing all available features regardless of need
D) Focusing solely on reporting capabilities
Answer: B
Explanation:
Ensuring the system supports risk management processes and decision-making needs represents the critical success factor because technology should enable and enhance risk management activities rather than driving process design around system capabilities. The system must align with how the organization actually practices risk management and provide information in formats and timeframes that support decision-making rather than creating technology overhead disconnected from operational needs.
Effective risk management information systems support key risk management processes including risk identification and assessment, control evaluation, risk reporting and monitoring, incident tracking, action plan management, and management decision support. The system should streamline these activities by automating data collection where possible, providing workflows for assessment processes, enabling efficient updating and reporting, and presenting information in ways that support analysis and decisions.
Decision-making support is particularly critical as the ultimate purpose of risk management information is enabling better risk-based decisions. The system should present risk information to decision-makers in accessible formats, support scenario analysis and what-if modeling, provide drill-down capabilities from summary views to supporting detail, enable filtering and sorting to focus on relevant risks, and integrate with other management information supporting strategic and operational decisions.
System cost should align with value delivered not be maximized. Implementing unneeded features creates complexity without benefit and may reduce user adoption. Reporting is important but only one component of comprehensive risk management support. While these factors have some relevance, only ensuring the system supports actual processes and decision needs guarantees the technology investment enhances rather than burdens risk management effectiveness by providing tools that align with how risk management actually functions.
Question 222
What is the PRIMARY objective of a risk control self-assessment?
A) To replace independent audits
B) To engage business units in evaluating their own risks and controls
C) To reduce risk management costs
D) To eliminate all risks
Answer: B
Explanation:
Engaging business units in evaluating their own risks and controls represents the fundamental objective of risk control self-assessment because RCSA promotes risk ownership, increases risk awareness throughout the organization, and leverages operational expertise for more accurate risk and control assessments. This participative approach embeds risk management into business operations rather than treating it as an external compliance exercise.
RCSA workshops or questionnaires guide business unit personnel through structured evaluation of risks affecting their operations and assessment of control effectiveness in managing those risks. Participants identify risks based on their operational knowledge, evaluate likelihood and impact, assess whether existing controls adequately mitigate risks, and identify control gaps or opportunities for improvement. This ground-level perspective often reveals risks and control issues that external assessors might miss.
The self-assessment process increases risk awareness and ownership among operational staff who perform daily activities and operate controls. Participants develop better understanding of why controls matter and how their actions affect risk levels. This cultural benefit often exceeds the direct value of assessment findings by promoting risk-conscious behaviors and proactive risk management as part of normal operations rather than specialized activities.
RCSA complements rather than replaces independent audits which provide objective validation and different perspective. Cost reduction may be a benefit but is not the primary purpose. Risk elimination is impossible and not the objective. While these may represent secondary outcomes, only engaging business units in self-evaluation fulfills RCSA’s core purpose of promoting operational risk ownership, increasing risk awareness, and leveraging front-line expertise to identify and assess risks from the perspective of those closest to the operations.
Question 223
An organization’s board of directors should be PRIMARILY involved in which risk management activity?
A) Conducting detailed technical risk assessments
B) Approving risk appetite and overseeing enterprise risk management
C) Managing day-to-day operational risks
D) Implementing specific risk controls
Answer: B
Explanation:
Approving risk appetite and overseeing enterprise risk management represents the appropriate board-level engagement because boards are responsible for governance functions including setting organizational direction, ensuring adequate risk management frameworks exist, and holding management accountable for risk management effectiveness. Board risk oversight operates at strategic rather than operational levels focusing on whether the organization manages risks appropriately to achieve objectives.
Risk appetite approval is a board responsibility because risk appetite reflects fundamental choices about how much uncertainty the organization will accept in pursuit of strategy. Boards approve strategies and therefore must approve the corresponding risk appetite that enables or constrains strategic choices. Board-approved risk appetite provides the framework within which management operates, establishing boundaries for risk-taking and guidance for risk response decisions.
Board risk oversight includes reviewing enterprise risk reports to understand significant risks facing the organization, evaluating whether management has implemented adequate risk management processes and controls, ensuring risk information flows to the board enabling informed governance decisions, and challenging management when risk exposures appear to exceed appetite or when risk management practices appear inadequate. The board ensures organizational culture supports appropriate risk management.
Detailed technical assessments are management and specialist responsibilities requiring technical expertise beyond typical board member backgrounds. Day-to-day operational risk management is a management function as boards govern rather than manage operations. Control implementation is an operational activity. While boards should understand these activities and their effectiveness, only approving risk appetite and overseeing ERM represents the governance-level strategic risk oversight appropriate to board responsibilities for ensuring the organization manages risks effectively.
Question 224
What is the MOST important factor when prioritizing risks for treatment?
A) The alphabetical order of risk names
B) Risk level relative to risk appetite and potential impact on objectives
C) The date risks were identified
D) Personal preferences of the risk manager
Answer: B
Explanation:
Risk level relative to risk appetite and potential impact on objectives represents the critical prioritization factor because limited resources require organizations to address the most significant risks first based on both their magnitude and their relationship to what the organization considers acceptable. Prioritization ensures resources focus where they provide greatest value in reducing unacceptable exposures and protecting critical objectives.
Comparing risk levels to risk appetite identifies which risks exceed acceptable thresholds requiring immediate attention versus risks within tolerance that may require only monitoring. Risks significantly exceeding appetite represent unacceptable exposures demanding priority treatment regardless of other factors. This appetite-based prioritization ensures risk management focuses on bringing exposures within acceptable bounds rather than treating all risks equally.
Impact on strategic and operational objectives provides the second critical prioritization dimension. Risks threatening critical objectives, revenue generation, regulatory compliance, or organizational reputation warrant higher priority than risks affecting less essential activities. Understanding objective linkage ensures risk treatment supports organizational success by protecting what matters most rather than addressing risks with minimal business relevance.
Combining these factors creates prioritization that is both risk-based focusing on the largest exposures and business-aligned protecting the most important objectives. This dual consideration produces treatment priorities that make sense from both risk management and business perspectives ensuring resources deploy where they reduce the most significant unacceptable risks to critical organizational priorities.
Alphabetical ordering, identification dates, and personal preferences lack objective basis for prioritization and could result in addressing trivial risks while ignoring critical exposures. Only risk level relative to appetite and objective impact provides rational prioritization supporting effective resource allocation to address the most important risks first.
Question 225
An organization wants to improve its risk reporting to senior management. What is the MOST important characteristic of effective risk reports?
A) Maximum technical detail and complexity
B) Concise presentation of key risks with actionable information
C) Lengthy documentation of all possible risks
D) Focus only on positive information
Answer: B
Explanation:
Concise presentation of key risks with actionable information represents the most important characteristic of effective risk reporting because senior management needs clear, focused information supporting strategic decisions rather than overwhelming detail that obscures critical messages. Effective reports communicate what matters most in formats enabling management to understand significant risks and take appropriate actions.
Conciseness respects management time constraints by focusing on the most significant risks, emerging threats, risks exceeding appetite thresholds, and risks requiring management decisions. Reports should highlight changes in risk levels, new risks, control failures, and treatment plan status without burying these critical items in exhaustive catalogs of all identified risks. Executive summaries provide high-level overviews with supporting detail available for drill-down when needed.
Actionable information enables management decisions by clearly presenting what decisions are needed, what options exist, what management should know about significant risks, and what actions management should consider. Reports should translate technical risk information into business impacts and strategic implications that senior leaders can understand and act upon. Recommendations should be specific and implementable rather than vague observations.
Risk reporting should provide balanced perspectives including both risks and opportunities, emerging and stable risks, and successes and challenges in risk management. Visualization through dashboards, heat maps, and trend charts often communicates more effectively than text-heavy reports. Regular reporting cadence with consistent formats helps management track risk evolution over time.
Excessive technical detail overwhelms rather than informs. Lengthy documentation is not read. Focusing only on positive information conceals risks requiring attention. These approaches fail to serve management needs. Only concise presentation of key risks with actionable information provides the focused, business-relevant communication that enables effective risk-based decision-making at senior management levels.