2. Managing Business Risk Flashcards
1
Q
What are four ways management accountants are involved in risk management? Also four stages of the risk process
A
- • risk identification
- • risk assessment
- • development of risk management treatments
- • monitoring and reporting.
2
Q
What are some procedures/checks that risk can be identified?
A
- • Physical inspections
- • Contract review
- • Business process mapping
- • Historical analysis
- • Compliance review
- • Insurance analysis
- • Internal controls review
- • Market and competitor analysis
- • Internal analysis
- • Strategic risk analysis
- • Emerging issues scans
3
Q
What are three types of external risks?
A
Industry
The broader business environment
The physical environment
4
Q
What are the 10 categories of risk that can impact an organisation?
A
Geo Political Safety Financial Strategic Operational Compliance Reputational Environmental Disaster Cyber Security
5
Q
What is a risk appetite?
A
Individuals and organisations must determine the right amount of risk to take in order to achieve the desired level of return. (i.e. the level of risk that an organisation is prepared to accept).
6
Q
What are the two common tools used in assessing risks?
A
Risk Scorecard (Likelihood x Impact = Risk Score) Risk Matrices
7
Q
What are two derivative tools used for interest rate hedging?
A
- Interest rate swaps (Two companies swap fixed/floating agreements through a bank)
- Forward rate agreements. (forward rate is agreed with a bank and either pays the difference after actuals happen)
