Bec1 Flashcards
insuring against losses or entering into joint ventures ( buy downs)
is a response to potential risks known as
Sharing
disposal of a business unit, product line, geographical segment
is a response to potential risks known as
Avoidance
self insuring ( within my business without an insurance company) or tolerating the full exposure to risk التحمل الكامل is a response to potential risks known as
acceptance
diversification of product offerings rather than elimination of product offerings is a response to potential risks known as
reduction
sourcing raw materials
is a response to potential risks known
an example of risk reduction
discontinuing the product or replacing the raw material with a locally available product
is a response to potential risks known as
risk avoidance
doing nothing
is a response to potential risks known as
risk acceptance
purchasing insurance or buying purchase option to ensure raw material availability from other sources or obtain purchase commitment with penalty for nonperformance
is a response to potential risks known as
risk sharing
its a CRIME if I forgot the five components of internal control
.Control environment .Risk assessment .Information and communication .Monitoring .Existing
principles for C
EBOCA
.commitment to Ethical values and integrity .Board independence and oversight .Organizational structure .Commitment to Competence .Accountability
principles of R
SAFR
.Specify objective
.analyze Risk
.potential for Fraud
.Assess changes
principles of I
OIE
.Obtain and use information
.Internal communication
External communication
principles for M
SO D
Ongoing/Separate evaluations
.communication of Deficiencies
principles of E
CA T P
.select and develop Control Activities
.select and develop Technology controls
deploy through Policies and Procedures
five components of ERM
GO PRO
.Governance and culture .strategy and Objective-setting .Performance .Review and revision .information communicating and reporting(Ongoing)
principles of G
DEVOS
.Desired culture .Oversight .core Values - tone at the top- .Employees .Structure
principles of O
SOAR
.Strategies - what is the vision
.Objectives - why do we exist-mission
.Analyzes business context
.Risk appetite
principles of P
VAPIR
.View - parent level .Assess risk .Prioritizes risk .Identify risk(events) .Responses -using "ARTS"
principles of R
SIR
.assess Substantial change
.Improvement in ERM
.Reviews risk and performance - how did we do with managing risk -was it the right hedge
principles for O
TIP
.Technology
.communicate risk Info
.reports on risk, culture, and Performance
can/can’t be eliminated through effective application of portfolio theory
diversifiable risk can be eliminated through effective application of portfolio theory and under diversifiable risks there is : non-market risk, firm-specific risk, unsystematic risk
can/can’t be eliminated through effective application of portfolio theory
non-diversifiable risk cannot be eliminated by the application of portfolio theory under non-diversifiable risks is market or systematic risk
what is the effective interest (cost) of the loan
multiply the stated rate to the total loan to result total interest of the loan and then subtract bank compensation balance if any after that I divide the total interest of the loan by the effective amount received to result the effective interest of the loan
