Ch 11

Question 1

Strategic Risk

Answer 1

Arise from the overall strategic positioning of the company in its environment e.g. the risk that an acquisition would fail

Question 2

Operational Risk

Answer 2

Potential losses arising from the normal business operations

Question 3

Compliance Risk

Answer 3

The risk of not complying with the relevant rules and regulations

Question 4

Reporting Risk

Answer 4

The relatively minor risk relating to the incorrect accounting for a particular items

Question 5

Risk management Group

Answer 5

Set goals to facilitate and co-ordinate the overall risk management process. They will promote the understanding and assessment of risk and facilitate the development of a strategy to deal with risk identified

Question 6

Upside Risk

Answer 6

Good outcomes

Question 7

Downside Risk

Answer 7

Bad outcomes

Question 8

Fundamental risks

Answer 8

Effect the whole economy/society and can’t be controlled by any one individual

Question 9

Particular risks

Answer 9

An individual may be able to control the risk

Question 10

Pure risks

Answer 10

Same as downside - bad outcome only

Question 11

Speculative risks

Answer 11

Can either have a good or a bad outcome e.g. exchange rates