RISKS

Question 1

External risks include

Answer 1

economic slowdown, regulatory changes, increasing competition, or damage to reputation

Question 2

steps taken to deal with risk

Answer 2

risk management policy, board approval of policy and risk monitoring and reporting

Question 3

UK risks law

Answer 3

Turnbull report, UKs governance code on how to assess and manage risk

Question 4

US risks law

Answer 4

sarbanes oxley act 2002, on how to assess and manage risk

Question 5

worldwide risks

Answer 5

Basel Agreements for the financial world

Question 6

expectations of risk

Answer 6

organsiations, expected to take risks, risks shouldnt be avoided but leveraged

Question 7

if a firm didnt take risks

Answer 7

it would still face risks from the external environment

Question 8

audit committee (risks)

Answer 8

could take on risk committee tasks, but its backward looking so separate committee is better

Question 9

risk management committee

Answer 9

consists of 4/5 INEDs, initially meet frequently and then meet 3/4 times a year
report to mains board and responsible for risk policy, procedure and plans

Question 10

risk management officer

Answer 10

senior exec, reports to CEO, responsible for working with committee and develops policies and keeps in touch with insurers

Question 11

levels of risks

Answer 11

SMO, strategic management and operational

Question 12

strategic threat from outside

Answer 12

financial crisis, technological changes, new laws and regulations, trade wars

Question 13

management hazards from activities

Answer 13

pollution, product recall, negative public attention (primark factory)

Question 14

operational hazards from enterprise

Answer 14

health and safety, waste, employee theft, ethical breach

Question 15

analysis of risks has 3 phases

Answer 15

recognition, assessment, evaluation

Question 16

recognition, identify risks, threats and hazards

Answer 16

identifying risks, directors and staff can see the extent and still support activities

Question 17

assessment, likely effect on business

Answer 17

risk assessment programme helps develop risk management policies

Question 18

evaluation, probability of risk

Answer 18

look at the chance of occurring and the magnitude of the risk and then deal with it accordingly

Question 19

4 methods of managing risk

Answer 19

avoid, mitigate, transfer and accept

Question 20

avoid

Answer 20

dont undertake the activity

Question 21

mitigate

Answer 21

undertake the activity but put in preventative controls to weaken the risk

Question 22

transfer

Answer 22

transfer the risk to a third party, insurance, hedging, outsourcing

Question 23

accept

Answer 23

undertake the activity and accept the risk to generate shareholder value

Question 24

ERM

enterprise risk management information system

Answer 24

vital to record risk factors such as nature, effects, likelihood and decisions of management in regard to the risk

Question 25

board in relation to ERM

Answer 25

should be committed to ERM as a framework for decision making and driving value

Question 26

boards duties

Answer 26

recognise risks, implement risk assessment systems and risk evaluation procedures and risk policies