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PYC3705 EXAM PACK 2023
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PYC3705 EXAM PACK 2023
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,ENTERPRISE RISK MANAGEMENT
SECTION B: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
companys 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 companys 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,priviledges 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 companys 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
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, -Implementation of risk can be resourced internally or externally.The
parameters of any planned actions have to be ommunicated,maopped 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 managent into its management process so that it becomes a
rouine activity.The frame work consists of the following five steps: a) Mandate
and commitment-Risk management must come from the topdown in an
organisation.(Organisation Management)
b)Design framework-Understanding the
organisation and its context,establishing the risk management
policy,embedding riskmanagement 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 perfoming
key tasks,establishes accountability with appropriate managers ,defines
boundaries, limits and formalises reporting structures. 6)Risk management
Process
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