6.3 The role of risk management in organisations Flashcards
Risk management is a profession that supports d_______ m______ in organisations.
decision making
Risk management can be applied in two main contexts:
- a____________ risk and
- r_________ to risk
anticipating
responding
What is a black swan event?
A risk event that occurs but was previously thought impossible or highly unlikely based on the available data.
List 5 modern black swan events
9/11 terror attacks Hurricane Katrina 2008 financial crisis Icelandic volcano eruption Coronavirus pandemic
In the face of uncertainty, organisations must invest in resilience, this means:
- c_____ management (responding to mitigate impact)
- b__________ continuity management (recovering quickly)
- l______ (reviewing past events to improve for the future)
crisis management
business continuity
learning
Risk management can strengthen internal controls through use of specialist tools such as:
- risk-based c________ reviews
- i__________ audits
- e_________ audits
compliance
internal
external
What is a risk-based compliance review?
An assessment of whether employees and managers are complying with applicable laws and regulations. “Risk based” means that the most high risk areas will be reviewed more frequently.
What is the purpose of internal audit?
To ensure that policies and procedures are designed and implemented effectively, and to check that operational processes are working efficiently.
What is “risk based” auditing?
The process of conducting more detailed and more frequent internal audits, allowing failures to be identified much more effectively.
What is the main purpose of external audit?
To review annually the financial reporting controls within an organisation, and ensure that the ARA are accurate and free from material misstatements.
