RSK2601 Enterprise Risk Management Exam Pack – Latest
Update on Study Notes & Questions
ENTERPRISE RISK MANAGEMENT
ESSAY QUESTIONS
ANSWER ALL QUESTIONS IN THE SPACES PROVIDED
QUESTION1-INTRODUCTION TO ENTERPRISE RISK MANAGEMENT (14MARKS)
Mrs Jacobs has just been appointed as the new CEO of CALL 4U Ltd.She
approaches you as the risk manager to gain a better understanding of the
implementation of enterprise risk management (ERM) within the company
Compile a report addressed to Mrs Jacobs in which you explain the elements of
an ERM structure
I) Corporate governance (board oversight)
-Corporate governance refers to a framework of rules and practices by which a
board of directors ensures Accountability, fairness and transparency in a
company’s relationship with all its stakeholders (financiers, customers,
management, employees, government and the community.
-The corporate governance framework consists of the following:
.Explicit and implicit contracts between the company’s and the stakeholders
for the distribution of responsibilities, rights and rewards
,.Procedures for reconciling the conflicting interests of stake holders in
accordance with their duties, privileges and roles
.Procedures for proper supervision, control and information flows to serve as a
system of checks and balances ii) Internal controls
-It refers to the process that is effected by a company’s board of directors,
management and other personnel, designed to provide reasonable assurance
regarding the achievement of objectives in the following categories:
-Reliability of financial reporting
-Compliance with applicable laws and regulations
-Effectiveness and efficiency of operations iii)
Implementation
-Implementation of risk can be resourced internally or externally. The
parameters of any planned actions have to be communicated, mapped and
agreed so that time factor, resources, costs, inputs and deliverables are
understood.
IV) Risk Management Framework
-Risk management framework is a conceptual structure that is used to address
the risks that are faced by an organisation.
-The purpose of the risk management framework is to assist an organisation in
integrating risk management into its management process so that it becomes a
routine activity. The frame work consists of the following five steps:
A) Mandate and commitment-Risk management must come from the top
down in an organisation. (Organisation Management)
B) Design framework-Understanding the organisation and its context,
establishing the risk management policy, embedding risk management in all of
the organisations practices
C) Implement framework-Timing of implementation of framework should
be planned and training sessions is required
, D) Monitor Framework-Periodically review internal and external
stakeholders whether the risk management framework, plan, policy and
process require amendments
E) Improve Framework-Based on the results of the monitor process,
decision should be made on whether the risk management framework step
should be amended
5) Risk management policy
-A Risk management policy sets out how the risks, which have been identified
by the risk assessment procedure, will be managed and controlled. The risk
management policy assigns responsibility for performing key tasks, establishes
accountability with appropriate managers, defines boundaries, limits and
formalises reporting structures.
6) Risk management Process
-It essentially applies management policies, procedures and practices to a set
of activities that are intended to establish the context, communicate and
consult with stakeholders and identify, analyse, evaluate, treat, monitor and
review the risk. All the processes are repeated throughout the organisation up
to the implementation of the risk response actions
7) Sources of Risks
-A risk source is where risk originates and the risk source has the intrinsic
potential to give rise to a risk.
QUESTION 2- ENTERPRISE RISK MANAGEMENT PROCESS (10MARKS)
2.1) briefly explain the following six (6) process activities which need to take
place in the risk evaluation stage (6)
BASIC CONCEPTS OF PROBABILITY
-It refers to the basic principles of probability, which can be used by a business
to measure expected outcomes of mutually exclusive and non mutually
exclusive events
SENSITIVITY ANALYSIS
Update on Study Notes & Questions
ENTERPRISE RISK MANAGEMENT
ESSAY QUESTIONS
ANSWER ALL QUESTIONS IN THE SPACES PROVIDED
QUESTION1-INTRODUCTION TO ENTERPRISE RISK MANAGEMENT (14MARKS)
Mrs Jacobs has just been appointed as the new CEO of CALL 4U Ltd.She
approaches you as the risk manager to gain a better understanding of the
implementation of enterprise risk management (ERM) within the company
Compile a report addressed to Mrs Jacobs in which you explain the elements of
an ERM structure
I) Corporate governance (board oversight)
-Corporate governance refers to a framework of rules and practices by which a
board of directors ensures Accountability, fairness and transparency in a
company’s relationship with all its stakeholders (financiers, customers,
management, employees, government and the community.
-The corporate governance framework consists of the following:
.Explicit and implicit contracts between the company’s and the stakeholders
for the distribution of responsibilities, rights and rewards
,.Procedures for reconciling the conflicting interests of stake holders in
accordance with their duties, privileges and roles
.Procedures for proper supervision, control and information flows to serve as a
system of checks and balances ii) Internal controls
-It refers to the process that is effected by a company’s board of directors,
management and other personnel, designed to provide reasonable assurance
regarding the achievement of objectives in the following categories:
-Reliability of financial reporting
-Compliance with applicable laws and regulations
-Effectiveness and efficiency of operations iii)
Implementation
-Implementation of risk can be resourced internally or externally. The
parameters of any planned actions have to be communicated, mapped and
agreed so that time factor, resources, costs, inputs and deliverables are
understood.
IV) Risk Management Framework
-Risk management framework is a conceptual structure that is used to address
the risks that are faced by an organisation.
-The purpose of the risk management framework is to assist an organisation in
integrating risk management into its management process so that it becomes a
routine activity. The frame work consists of the following five steps:
A) Mandate and commitment-Risk management must come from the top
down in an organisation. (Organisation Management)
B) Design framework-Understanding the organisation and its context,
establishing the risk management policy, embedding risk management in all of
the organisations practices
C) Implement framework-Timing of implementation of framework should
be planned and training sessions is required
, D) Monitor Framework-Periodically review internal and external
stakeholders whether the risk management framework, plan, policy and
process require amendments
E) Improve Framework-Based on the results of the monitor process,
decision should be made on whether the risk management framework step
should be amended
5) Risk management policy
-A Risk management policy sets out how the risks, which have been identified
by the risk assessment procedure, will be managed and controlled. The risk
management policy assigns responsibility for performing key tasks, establishes
accountability with appropriate managers, defines boundaries, limits and
formalises reporting structures.
6) Risk management Process
-It essentially applies management policies, procedures and practices to a set
of activities that are intended to establish the context, communicate and
consult with stakeholders and identify, analyse, evaluate, treat, monitor and
review the risk. All the processes are repeated throughout the organisation up
to the implementation of the risk response actions
7) Sources of Risks
-A risk source is where risk originates and the risk source has the intrinsic
potential to give rise to a risk.
QUESTION 2- ENTERPRISE RISK MANAGEMENT PROCESS (10MARKS)
2.1) briefly explain the following six (6) process activities which need to take
place in the risk evaluation stage (6)
BASIC CONCEPTS OF PROBABILITY
-It refers to the basic principles of probability, which can be used by a business
to measure expected outcomes of mutually exclusive and non mutually
exclusive events
SENSITIVITY ANALYSIS
