Chapter 7 - Risk Management and Responsibilities Flashcards
Is risk management mentioned in the list of matters in the Companies Act 2006?
No
Where would a risk manager sit in the organisation?
Board, middle management, or lesser role
What is the head of an ERM group risk function called?
Chief Risk Officer, Group Risk manager, etc.
Are operational colleagues responsible for RM?
Yes
What is the basic philosophy of ERM?
Risk management principles and practice must be embedded throughout the organisation
Define a decentralised risk management role
Small head office with the management and operation on units assigned to the division
Define a centralised risk management role
Operations closely managed from centre
Advantages of a centralised approach
- Build a centre of excellence
- aggregate reporting and data analytics to identify systematic risks
Disadvantages of a centralised approach
- Head office team will not always have same level of detail as regional team
- Slow decision making
What is the hybrid approach?
Decentralised structure with small strategic RM team. Standards are set though a group risk policy and a group risk management manual
What is stated in the Companies Act 2006?
- Board directors are legally required to have the interest of employees
What are the 3 lines of defence?
Operational team, Risk Management team, Internal audit team
What is the difference between board members and executives?
Board Members: Accept responsibilities under the law that apply to running a corporate body
Executive: Admin and Supervisory authority in an organisation
Define Group risk?
An extra layer of management and supervision in a large corporation
How does the CRO and Risk Manager differ?
CRO heads up the ERM group risk function, it infers a more overarching role. Risk manager potentially could be the same role but a different name
