BEC Custom 9 Flashcards
Risk
possibility of loss or other unfavorable outcome that results from uncertainty inherent in future events
Business Risk
- the broad, macro-risk a firm faces largely as a result of the relationship between the nature of the firm and the nature of its environment
Diversifiable risk (also Unsystematic or Firm-specific)
- elements of risk that can be eliminated through diversification of investments
Non-diversifiable risk (Systematic or Market-related risk)
- elements of risk that can’t be eliminated through diversification of investments
EBIT
- earnings before interest and taxes
- measures the results of a firm’s operating activities, except debt financing
Financial risk
- common shareholders’ risk that result from the use of debt financing and preferred stock which require payment before common shareholders receive a return on investment
Default risk
Risk that the issuer of a security will not be able to make future interest and/or principal payments; the risk that the issuer may default on its obligation
Interest rate risk
- risk that increases in market rate of interest will decrease the value of outstanding debt
Inflationary (also purchasing power) risk
- risk that a rise in general price levels (inflation) will result in a reduction in the purchasing power of a fixed sum of money
Liquidity (also Marketability) risk
Risk that an asset can’t be readily sold at fair value for cash
Political risk
Risk associated with operations in a foreign country that has different political, governmental, cultural, ethical, market structure, or other socio-political elements than a firm’s domestic market
What is the purpose of COBIT?
- align IT and business goals/strategies
- link business risks, control needs & IT
- common language for users, auditors, management and business process owners in identifying risks and structuring controls
What are the basic elements of the COBIT framework?
- IT resources
- monitor and evaluate
- deliver and support
- acquire and implement
- plan and organize
What is the COBIT focus?
IT controls and processes
What is the focus of COSO?
organizational controls and processes
What is the goal of a Enterprise Resource Planning System (ERP)?
- to integrate management support, knowledge work support, and operational support into one system
Online Transaction Processing System (OLTP)
- include core business functions - sales, production, purchasing, payroll, financial reporting, etc.
Online Analytical processing system (OLAP)
- data warehouse and data mining capabilities within ERP