Chapter 4 - Supervision Principles And Practices

Question 1

Factors that impact type of supervision

Answer 1

Size
Complexity of products and services
Geographical factors
Competence of advisers
Competence of managers
Structure of business - matrix mgmt? Centralised/decentralised?
Culture and staff engagement

Question 2

Risk based supervision

Advantages and disadvantages?

Answer 2

Advantages

Focus resources where most needed
Focus on best practice
Enables some risks to be avoided
Efficiency
Enables systematic and informed decisions

Disadvantages
Incorrect risk assessment may waste resource
Opportunity cost - resources cannot be deployed elsewhere
Over cautious approach may prevent business doing anything new

Question 3

3 Lines of Defence

Answer 3

Enables business too motor and identify when process/control not working

First line
Operational

Second line
Risk, compliance, quality, financial control, security

Third line
Internal or external audit

Question 4

Staff engagement

Name three each of
Qualitative measures
Quantitative measures

Answer 4

Qualitative
Structured interviews (eg exit interview)
Focus groups
Grapevine
Client feedback

Quantitative
Retention and turnover
Absenteeism
Engagement survey

Question 5

Matrix management

Advantages and disadvantages?

Answer 5

Advantages

Specialism and expertise
Independence of function - eg compliance
Cost effective? - resource management

Disadvantages
Part timers?
Lack of clear reporting line and responsibilities
Conflict of interest
Dilution of focus
Hierarchy issues - eg specialists manage seniors
Outsider/policeman psychology