ERM

Question 1

List Components of Enterprise Risk Management

Answer 1

1. INTERNAL ENVIRONMENT
2. OBJECTIVE SETTING
3. ID EVENTS as risks
4. RISK ASSESSING
5. RISK RESPONSE
6. CONTROL ACTIVITIES
7. INFO & COMMS
8. MONITORING outcomes

Question 2

What is Internal environment?

Answer 2

Company culture and manner of company to address risks.

Question 3

What is Objective Setting?

Answer 3

Setting objectives to find risks and analyse responses

Question 4

What is Event ID?

Answer 4

1. ID which events are opportunities & determine how to exploit this or these
2. This will have SWOT involved

Question 5

What is Risk assessment?

Answer 5

1. ID which events are risks
   
   1. any risks that could threaten firm’s survival, prevent achievement of goals, and current issues
2. Probabilities of expected losses are calculated

Question 6

What is Risk Response?

Answer 6

1. Actions taken by mgmt in response to risks
2. these actions can be mitigation or transfers of risks

Question 7

What is Control activities?

Answer 7

1. Procedures set up to manage risk and execute actions needed to address risks

Question 8

What are the steps for mitigating risks?

Answer 8

1. Determine tolerance for risk
2. Evaluate risk response
3. Action on it
4. Monitor risk response

Question 9

Event Inventory

Answer 9

list of potential events SPECIFIC to industry or division

Question 10

Business Risk is affected by what?

Answer 10

1. firm’s degree of operating leverage
2. shifts in consumer demand
3. price of product variation
4. inflation impact on input prices

Business risk is typically the risk of EBIT due to various factors