Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 24, Problem 5MC
Summary Introduction
Case summary: A mid-sized company TSI has hired a financial analyst. The company creates the exotic sauces from imported fruits and vegetables. The CEO of the company has asked the financial analyst to make a report on enterprise risk management thus company’s executive may gain knowledge about enterprise risk management as no one knows about it in the organization.
To discuss: Some of the risk events for each risk category.
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Students have asked these similar questions
Describe some of the risks events within the following major categories of risk: (1) strategy andreputation, (2) control and compliance, (3) hazards,(4) human resources, (5) operations, (6) technology,and (7) financial management.
a)discuss the following risks: operational risk, model risk, liquidity risk, accounting risk, legal risk, tax risk, regulatory risk, settlement (Herstatt) risk, systemic risk
b)compare and contrast view-driven risk management and needs-driven risk management.
c)identify the key players in the risk management industry, and discuss how risk management requirements and practices differ amongst these key players.
d)discuss some important organizational considerations for an effective risk management system.
e)explain what is meant by enterprise risk management, and compare and contrast it with decentralized risk management.
Which of the following are true regarding internal auditors and the adequacy of an organization’s risk management process:
I. Internal auditors must understand the risk assessment process and the tools used to make the assessment
II. Internal auditors should determine the level of risks acceptable to the organization
III. Internal auditors need to be satisfied that the key objectives of risk management processes are being met
IV. Internal auditors should evaluate management’s risk processes the same way they analyze risk when planning an engagement
Choices:
a. I and III only
b. I and II only
c. None of the choices
d. I, II, III and IV
e. I, II and III only
Chapter 24 Solutions
Intermediate Financial Management (MindTap Course List)
Knowledge Booster
Similar questions
- 1. How does internal control impart on the achievement of organization’s goals? 2. Why risk management process is essential in addressing risks that the organization is facing? 3. Differentiate qualitative and quantitative assessment of risks.arrow_forwardWhy risk management process is essential in addressing risks that the organization is facing?arrow_forwardEnterprise risk management A. Guarantees achievement of organizational objectives. B. Requires establishment of risk and control activities by internal auditors. C. Involves the identification of events with negative impacts on organizational objectives. D. Includes selection of the best risk response for the organization.arrow_forward
- Describe a situation in risk management that involves ethical aswell as financial issues.arrow_forwardWhich of the following is not one of the components of COSO’s framework? A. Objective setting which includes setting the objectives and critical success factors B. Continuously monitoring the ERM process C. Risk Assessment to manage risk related to achieving corporate objectives D. Safeguarding assets to prevent or detect unauthorized acquisition, use or disposition E. Control Activities which include policies and procedures to assure that management’s control objectives are metarrow_forwardCompany management completes event identification and assesses the severity of risk. Management then acts to alter the severity of risk. According to COSO’s ERM framework, the risk remaining after management’s actions is A. Inherent risk. B. Actual residual risk. C. Event risk. D. Target residual risk.arrow_forward
- As IT auditors, it's critical that we establish a common "risk" language with management. Importantly, this common language should consider: a) How an IT risk may impact the organization's ability to generate revenue. b) How an IT risk may impact the customer experience. c) How an IT risk may impact the expenses and costs incurred by the organization, such as privacy legal fines for non-compliance. d) All of the abovearrow_forwardWhat are the primary tasks and Education, Training, & Certification, the primary industries of a risk manager?arrow_forwardDiscuss the auditor's risk assessment procedures for assessing control risk, and provide specific procedures related to understanding management's risk assessment component of internal control.arrow_forward
- Risk is defined by some as the possiblity of danger or the possible exposure to danger. Whereas, risk management is viewed as a systematic process of assessing the potential risk to a business which incorporates identifying, evaluating, monitoring/tracking and reporting risk to the board/senior management. Risk management processes are evolving with the focus on all of the following EXCEPT: Question 1Answer a. Development of regulator guidelines for imposing risk-based techniques to reduce systemic risks. b. Examining the different components of the risk management framework. c. Emergence of new organizational processes for better integrating these advances. d. Developing risk-based techniques to meet risk-based capital requirementsarrow_forward1. Looking at the COSO framework for Enterprise Risk Management, you will notice that this is present all throughout the various functions and levels in an organization. This is to ensure that policies and procedures are followed in making risk responses and implementing company's directives. A. Control Activities B. Risk Assessment C. Monitoring Activities D. Risk Culturearrow_forwardWhen assessing the risk associated with an activity, an internal auditor should: Provide assurance on the management of the risk. Update the risk management process based on risk exposures. Determine how the risk should best be managed.arrow_forward
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