Module 2 unit 4: Risk & organisations

Question 1

Provide the Financial Reporting Council’s definition of “corporate governance”

Answer 1

Corporate governance is a system by which companies are directed and controlled

Question 2

List two of the main principles of the UK Corporate Governance Code, which applies to UK listed companies

Answer 2

1. Leadership - effective board collectively focussed on long-term success
2. Effectiveness - board with approppriate balance of skills, experience and knowledge of the company to dishcarge their duties effectively
3. Accountability - The board should present a fair, balanced and understandable assessment of the company’s position and prospects. The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives.
4. Remuneration - Levels of remuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but a company should avoid paying more than is necessary.
5. Relations with shareholders - There should be a dialogue with shareholders based on the mutual understanding of objectives.

Question 3

Provide a definition of “operational risk”

Answer 3

The risk of loss, resulting from inadequate or failed internal processes, people and systems, or from external events.

Question 4

What is the essential feature of the UK Corporate Governance Code with regard to leadership?

Answer 4

Every company should be headed by an effective board which is collectively responsible for the long-term success of the
company.

Question 5

What is the “comply or explain” regime?

Answer 5

All companies listed on the UK Stock Exchange must comply with the UK Corporate Governance Code and where there are areas of non-compliance these must be explained in the annual report and accounts.

Question 6

What are the two key metrics in project risk?

Answer 6

Delivery within time frame and within budget.

Question 7

How can an organisation improve its project risk management?

Answer 7

A PMO should be formed, staffed with project management specialists, or externally engaged project managers.

Question 8

List the four stages of the project life cycle

Answer 8

Inception
Planning
Execution
Closure

Question 9

List two activities associated with the Inception stage of the project life cycle

Answer 9

Feasibility studies
Outline cost plans
Appointments

Question 10

List two activities associated with the Planning stage of the project life cycle

Answer 10

Detailed design
Scheduling
Procurement

Question 11

List two activities associated with the Execution stage of the project life cycle

Answer 11

Construction
Cost reporting
Quality check

Question 12

List two activities associated with the Closure stage of the project life cycle

Answer 12

Handover

Project review