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M67 - Fundamentals of Risk Management > Roles and Responsibilities > Flashcards

Roles and Responsibilities Flashcards

1
Q

What does Risk Management depend on?

A
  • A clear statement of objectives from the board of directors
  • A systematic approach to risk identification in changing circumstances
  • An analysis of risks against criterial set by the board
  • Effective management of selected risks
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2
Q

What is the purpose of the responsibility for risk management remaining with the board?

A
  • ensure system is working as intended

- enable control to be exercised

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3
Q

What is the structure an organisation sets up to control risk management across the whole of its organisation?

A

Enterprise Risk Management (ERM)

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4
Q

What does ERM allow for?

A

All risks to be looked at together and from different perspectives (holistic approach)

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5
Q

Can ERM be used in large/public organisations?

A

No

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6
Q

What are the benefits of successful risk management?

A
  • Better informed strategic decisions
  • Successful management of change and higher operational efficiency
  • More accurate financial reporting
  • Reduced borrowing costs
  • Improved competitive advantage
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7
Q

What elements makes a successful ERM system?

A
  • Workable framework clarifying functional responsibilities and interactions and the systems for internal communication, reporting and control
  • Personalising the framework
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8
Q

Why is the ERM framework important?

A
  • Shows how essential functions combine to create an integrated system
  • specifies required information flows
  • identifies where overlapping responsibilities might occur
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9
Q

What does GRC stand for?

A

Governance, risk and compliance

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10
Q

Activities of risk management, audit and compliance are likely to…

A

Give rise overlapping responsibilities

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11
Q

What is the main purpose of the risk management, compliance and audit functions?

A

Improve corporate governance

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12
Q

What is an objective of GRC?

A

Rationalise information gathering and processing structures using common technology

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13
Q

Requiring risk management, audit and compliance to agree on definitions helps, coordinate their activities helps…

A

reduce redundancy in operations

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14
Q

What ensures less room for misunderstanding and more scope for consolidating information?

A

Common GRC software and agreement to work on a common database

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15
Q

GRC can be introduced quickly/easily? True or False?

A

False

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16
Q

In a typical ERM system what would a group risk management function be responsible for?

A
  • Setting up and maintaining the ERM framework

- Managing all risk management functions within the group

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17
Q

What does a Chief Risk Officer do?

A

Report risk matters to the CEO of the board, senior management committees and to the board of risk subcommittee.

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18
Q

Are the risk subcommittee and audit subcommittee independent channels to the board?

A

Yes

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19
Q

What is a qualitative indication of progress in developing risk awareness in an organisation?

A

Regularly assessing the current level of risk culture.

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20
Q

What processes are used to evaluate the extent to which the risk culture is embedded in organisation procedures and practices?

A

Observations, audit and interviews

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21
Q

What does the board of directors do?

A

Watch over an organisation and give it overall direction

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22
Q

What does the UK Corporate Governance Code charge directors with?

A
  • Setting company’s strategic aims
  • Supervising management of business
  • Reporting to shareholders on their stewardship
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23
Q

Is a risk committee a full board?

A

No

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24
Q

What is the first and most important task of a risk subcommittee?

A

Publish and maintain overall risk management philosophy

25
Q

What is corporate governance?

A

The way a board sets up an organisation to achieve its objectives, with systems in place.

26
Q

Provides a code of best practice for companies listed on the London Stock Exchange?

A

The UK Corporate Governance Code

27
Q

Who oversees the UK Corporate Governance Code?

A

Financial Reporting Council

28
Q

How often is the UK Corporate Governance Code reviewed?

A

Every 2 years

29
Q

What is the Sarbanes-Oxley Act 2002?

A

Established enhanced standards for US companies by their financial regulator.

30
Q

What is stricter tin enforcement he SOX Act of Uk Corporate Governance Code?

A

SOX Act

31
Q

Does SOX have more or less emphasis on RM than the Corporate Governance Code

A

Less

32
Q

What are internal controls?

A

Devices and procedure to ensure that management objectives are met

33
Q

What doe internal audits provide?

A

Independent assurance on controls and recommend improvements where applicable

34
Q

What does COSO stand for?

A

Committee of Sponsoring Organisation of the Treadway Commission

35
Q

Define COSO?

A

Defines internal control as a process, effected by stakeholders to provide ‘reasonable assurance’ regarding achievement of objectives

36
Q

How does COSO describe internal control?

A
  1. Control environment
  2. Risk Assessment
  3. Control Activities
  4. Information and Communication
  5. Monitoring activities
37
Q

What is CSA?

A

Control Self Assessment

Process applied systematically across an organisation at various levels

Requires self-review and self-audit risk controls

38
Q

Why is CSA useful?

A

Ensures compliance with corporate standards

39
Q

What will an audit team consider to understand whether ERM systems and procedures are effective?

A
  • Significant risks are being identified and assessed
  • appropriate risk responses are selected
  • relevant risk information is captured
40
Q

Where does the responsibility for risk control throughout an organisation lie?

A

With the board of directors

41
Q

What is a risk management architecture?

A

Structure by which risk is intended to be managed in a written document

42
Q

What will a document describing the risk architecture include as a minimum?

A
  • Board member/subcommittee responsible for RM
  • State how risk is perceived
  • Specify roles/responsibilities of senior risk professionals
43
Q

What are RM frameworks designed to ensure?

A

Management decisions are based on good and consistent risk information

44
Q

The risk owner should be responsible for…

A

assessing and managing the organisation’s response.

45
Q

What is the chief risk officer responsible for?

A

Establishing and maintaining ERM
Setting detailed targets and objectives within board remit
Demonstrating objectives have been met

46
Q

A risk officer is…

A

A person who carries out selected duties under the guidance of the CRO. Duties subset of CRO

47
Q

Why are committees established?

A

To bring together experts from different areas

48
Q

How is information flowed through a committee

A

Upwards

49
Q

The amount of risk an organisation is prepared to accept, tolerate or be exposed to is called its…

A

Risk appetite

50
Q

How can a risk appetite policy be treated?

A

As a discussion document to be continually refined

51
Q

Risk tolerance describes?

A

Risks an organisation might be able to put up with

52
Q

How do we arrange risks?

A

In order of impact and frequency

53
Q

What is LILAC?

A

Activities that promote a risk aware culture. (Health and Safety Executive)

54
Q

What does LILAC stand for?

A 
Leadership 
Involvement 
Learning 
Accountability 
Communication
55
Q

What is an advantage to an organisation of having a successful enterprise risk management programme?

A

An improved competitive advantage.

56
Q

A claims manager has been asked by the risk management department to review whether the claims settlement authorities granted to claims handlers are being followed and to report his findings to them. What type of risk management technique is being used?

A

Control self assessment.

57
Q

What is corporate governance?

A

Way a board sets u an organisation to achieve its objectives together with the systems in place

58
Q

What is the difference between risk appetite and risk tolerance?

A

Risk appetite - describes risk organisation is willing to take
Risk tolerance - describes risks an organisation may be able to put up with

59
Q

What activities support a risk aware culture?

A

leadership, involvement, learning, accountability and communication

M67 - Fundamentals of Risk Management (7 decks)

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