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OBS330 > Block 11 > Flashcards

Block 11 Flashcards

1
Q

Business decision categories

CBD Or First Letter

A
  • Big-bet decisions
  • Cross-cutting decision
  • Delegated decision
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2
Q

Conditions for decision making

CUR

A

Certainty
Risk
Uncertainty

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3
Q

Conditions for decision making

CUR

Certainty

A

Information is sufficient to predict the results of each alternative in advance of implementation

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4
Q

Conditions for decision making

CUR

Risk

A

Lack of complete certainty regarding various courses of action, but can assign probabilities to occurrences

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5
Q

Conditions for decision making

CUR

Uncertainty

A

So little information that they cannot even assign probabilities to various alternatives and possible results

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6
Q

Risk

A

The possibility that the event will occur and adversely affect the achievement of objectives

• Generally viewed as negative
• Anything that threatens a company’s ability to achieve its goals

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7
Q

Risk management

A

Coordinated activities to direct and control an organization with regards to risk

Process of identifying, monitoring managing, forecasting and evaluating risks and finding procedures to avoid or minimize their impact

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8
Q

Types of Risk

Big Furry Hamsters

A

Business
Financial
Hazard

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9
Q

Types of Risk

Big Furry Hamsters

Business

A

Will/won’t compete successfully in its operations

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10
Q

Types of Risk

Big Furry Hamsters

Financial

A

Will/won’t have adequate funds for its operations

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11
Q

Types of Risk

Big Furry Hamsters

Hazard

A

Exposures that can cause loss without the possibility of gain

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12
Q

Role of risk management in strategy performance

A

• Organisation regularly engage in strategic planning but they often don’t forsee all the risks that could derailed the effective execution of intended strategies

• Strategic management is dependent on how well an organization can determine and manage risk

• Necessary to ensure effective and efficient operations

• Essential for business continuity and the creation and protection of value

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13
Q

Enterprise Risk Management (ERM) definition

Pizza And Alcohol Every Rainy Afternoon

A

• Process
• Affected by BOD, management and personnel
• Applied in strategy setting and across the enterprise
• Designed to identify potential events that may affect the entity and
• and manage risk within its risk appetite
• to provide reasonable assurance regarding the achievement of entity objectives

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14
Q

COSO ERM Framework
(Definition)

A

Framework for designing, implementing and evaluating internal control organizations, providing enterprise risk management

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15
Q

COSO ERM Framework
(2 Types)

A
  1. COSO ERM - Integrated Framework (Cube) 2004
  2. COSO ERM - Integrated with Strategy and Performance (Ribbon) 2017
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16
Q

COSO ERM Framework (Top)
Name the 4 Objectives/Risks

Smart Owls Read Carefully

A

Strategic
Operating
Reporting
Compliance

17
Q

COSO ERM Framework (Top)
Describe the 4 Objectives/Risks

Smart Owls Read Carefully

A
  1. Strategic: High level and aligned with an entity’s mission
  2. Operating: Effective and efficient use of resources
  3. Reporting: Need for reliable Reporting
  4. Compliance: Comply with applicable laws and regulations
18
Q

COSO ERM Framework (Front)
Name the 8 Components

Invisible Octupus Mindlessly Eats Real Rainbow Ice Cream

A

Internal environment
Objective setting
Monitoring
Event identification
Risk assessment
Risk response
Information and Communication
Control activities

19
Q

COSO ERM Framework (Front)
Describe 8 Components: Internal Environment

Invisible

A

Internal environment:
Encompasses the tone ‘at the top’ of the enterprise and influences the organisation’s governance process and the risk and control consciousness of its people

20
Q

COSO ERM Framework (Front)
Describe the 8 Components: Objective setting

**Octupus*

A

Objective setting:
Process to set objectives
Objectives support and aligh with the entity’s strategy and are consistent with risk philosophy and appetite

Objectives drive event identification, risk assessment and risk response

21
Q

COSO ERM Framework (Front)
Describe the 8 Components: Monitoring

Mindlessly

A

Monitoring: Ongoing tracking and evaluating to access the presense and functioning of ERM components and the quality of performance over time

22
Q

COSO ERM Framework (Front)
Describe the 8 Components: Monitoring

Mindlessly

A

Monitoring: Ongoing tracking and evaluating to access the presense and functioning of ERM components and the quality of performance over time

23
Q

COSO ERM Framework (Front)
Describe the 8 Components: Event identification

Eats

A

Event identification:
Identify potential (positive or negative) events (from internal or external sources) affecting achievement of objectives

Negative events represent risks
Positive event represent risk upside/opportunity

24
Q

COSO ERM Framework (Front)
Describe the 8 Components: Risk assessment

Real

A

Risk assessment:
Qualitative and quantitative methods to evaluate the likelihood and impact of potential events over given time horizon

25
Q

COSO ERM Framework (Front)
Describe the 8 Components: Risk response

Rainbow

A

Risk response:
Alternative risk response options and their effect on likelihood and impact

Resulting cost versus benefits

26
Q

COSO ERM Framework (Front)
Describe the 8 Components: Information and communication

Ice

A

Information and communication:
Communicate relevant information (from internal and external sources) in a form and timeframe that enables personnel to carry out their responsibilities

27
Q

COSO ERM Framework (Front)
Describe the 8 Components: Control activities

Cream

A

Control activities:
Policies and procedures implemented throughout the organization to help ensure that risk responses are properly executed

28
Q

COSO ERM Framework (Side)
Name the 4 Units/parts of the Organisation

Silly Bunnies Dance Everywhere

A

Subsidiary
Business Unit
Division
Entity-level

29
Q

COSO ERM - S&P (ribbon) * 2017
Name the 5 components

Giant Snakes Play Rugby Intensely

A

1.Governance and Culture
2. Strategy and objective setting
3. Performance
4. Review and Revision
5. Information, communication and Reporting

30
Q

COSO ERM - S&P (ribbon) * 2017

Component: Giants Governance and Culture
5 Principles: SOVIC

A

Governance and Culture:
Governance sets tone for the organization and establishes oversight responsibilities for ERM
Culture relates to ethical values desired behaviors and understanding of risk

Principles:
• Exercise broad risk oversight
• Establish operating structures
• Defines desired culture
• Demonstrates commitment to core values
• attract, develop and retain capable individuals

31
Q

COSO ERM - S&P (ribbon) * 2017

Component: Snakes Strategy and Objective Setting
4 Principles: CASO

A

Strategy and Objective Setting:
Focuses on strategic planning and how the organization can understand the effect of internal and external factors on risk

Principles:
• Analyze business context
• Define risk appetite
• Evaluate alternative strategies
• Formulate business objectives

32
Q

COSO ERM - S&P (ribbon) * 2017

Component Play:Performance
5 Principles: RPSPR

A

Performance

Principles:
• Identifies risks
• Assesses severity of risk
• Prioritizes risk
• Implements risk responses
• Develops portfolio view

33
Q

COSO ERM - S&P (ribbon) * 2017

Component Rugby: Review and Revision
3 Principles: RIC

A

Reviews and revision:
How well ERM components of functioning, over time and substantial change, and what revisions are necessary

Principles:
• Assessess substantial change
• Reviews risk and performance
• Pursue improvements in ERM

34
Q

COSO ERM - S&P (ribbon) * 2017

Component Intensely: Information, Communication and Reporting
3 Principles: LRC

A

Information, communication and Reporting:
Continuous process of obtaining and sharing necessary information (internal & external sources, flows all directions)

Principles:
• Leverages information and technology
• Communicates risk information
• Reports on risk, culture and Performance

35
Q

ISO 3100
Definition

A

• International standard associated with risk management
• Provides principles and guidelines for effective risk management
• Outlines a generic approach to risk management
• Can apply to different types of risks and used by any type of organization

36
Q

ISO 31000 Risk management framework

D3IE

A

• design
• integration
• implementation
• improvement
• evaluation

37
Q

ISO 31000 risk management principles

BID HICCS

A

• best available information
• integrated
• dynamic
• human and cultural factors
• inclusive
• customized
• continual improvement
• structured and comprehensive

38
Q

ISO 31000 risk management process

CRM Criteria 5Risk (TEAIA)

A

• communication and consultation
• recording and reporting
• monitoring and review
• scope, context, criteria
• risk assessment
• risk identification
• risk analysis
• risk evaluation
• risk treatment

OBS330 (2 decks)

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