November 2022

Question 1

What was Barclay’s LIBOR scandal?

Answer 1

[Link with risk culture] The LIBOR scandal involving Barclays unfolded in June 2012. Over a four-year period from 2005 to 2009, Barclays repeatedly attempted to manipulate the London Interbank Offered Rate (LIBOR), a benchmark interest rate crucial to global financial markets. As a result, Barclays faced fines and penalties totaling $453 million from regulators in the U.K. and U.S.

Question 2

Name 7 compliance requirements

Answer 2

• Anti Money Laundering
• Counter Terror Financing
• Climate change disclosures
• Corp Gov reporting
• Environmental compliance
• Contingency planning
• Data protection regulations

Question 3

Discuss Interserve cast study

Answer 3

Interserve plc collapsed in shared price and had a real risk of bankruptcy in 2019 due to expansion into energy-from-waste sector with no expertise

Question 4

Name 6 bases of internal control mechanisms under UK Bribery Act 2010

Answer 4

1. proportionality
2. top-level commitment
3. risk assessment
4. due diligence
5. communication
6. monitoring and review

Question 5

Name three key layers of organisational culture

Answer 5

1. visible products
2. underlying assumptions
3. beliefs and values

Question 6

Name 5 tools that measure risk culture

Answer 6

1. employee surveys
2. focus groups
3. interviewing staff
4. analysis of HRMI
5. internal audit

Question 7

Compare three lines, three lines of defence and five lines of assurance

Answer 7

Three lines of defence:
- 1st (ops management); 2nd (risk management); 3rd (internal audit)

Three lines model (IIA)
- defence removed as threat-focused perspective on risk.
1. Gov requires structures and process that enable accountability; risk-based decision-making and assurance
2. The governing body is accountable for effective governance, but must delegate much of the day-to-day responsibilities to management.
3. Management spans the first and second. Lines may be blended or separated.
4. First line role involves delivery of products/services and management of associated risks
5. Second line assists first with management of risk - but first retains responsibility for management
6. Third - independent and objective assurance on adequacy and effectiveness.
7. All lines must work together to create and protect value for the org and its stakeholders

Five lines of assurance
- Relatively new (Leech and Hanlon), somewhat superseded by IIA
- No “defence”
- More explicity role of Board
1. Work units
2. Specialist units (e.g. risk function)
3. internal audit
4.CEO/MD/etc
5. Board/Trustees