Risk - Technical Notes Flashcards
1
Q
What should management do for risk
A
Identify
Determine if risk is acceptable with appetite
Assess likelihood it will materialise
Cost v benefits
2
Q
What are the categories of risk?
A
Strategic
Operational
3
Q
What are examples of strategic risks?
A
Market Credit Liquidity Technological Legal Outsource Health and safety Reputation
4
Q
Draw TARA diagram
A
Impact low to high
Probability low to high
Transfer > Avoid > Reduce > Accept
5
Q
When would you transfer
A
House fire - insurance
6
Q
When would you reduce
A
Internal controls, shop lifting > CCTV
7
Q
When would you avoid
A
Exchange rate risk - hedging
Economic downturn - diversification
8
Q
What are the characteristics of information?
A
Accurate Complete Cost beneficial User targeted Relevant Authoritative Timely Easy to use
