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level: module 2

Questions and Answers List

level questions: module 2

QuestionAnswer
What is the different between business and corporate risks?Business Risk is sometimes limited to just commercial matters whereas Corporate Risk usually refers to all aspects of establishing and operating a business
What is a business/corporate risk?A future possibility that may prevent you from achieving a business/corporate goal. Can be beyond your control.
What is a competitive risk?The risk that your competition will gain advantages over you that prevent you from reaching your goals. For example, competitors that have a fundamentally cheaper cost base or a better product.
What is an economic risk?The possibility that conditions in the economy will increase your costs or reduce your sales.
What is an operational risk?The potential of failures related to the day-to-day operations of an organization such as a customer service process. Some definitions of operational risk claim that it is the result of insufficient or failed processes. However, operational processes that are deemed to becomplete and successful also generate risk
What is a legal risk?The chance that new regulations will disrupt your business or that you will incur expenses and losses due to a legal dispute
What is a compliance risk?The chance that you will break laws or regulations. In many cases, a business may fully intend to follow the law but ends up violating regulations due to oversights or errors
What is a strategy risk?The risks associated with a particular strategy
What is a reputational risk?Reputational risk is the chance of losses due to a declining reputation as a result of practices or incidents that are perceived as dishonest, disrespectful or incompetent. The term tends to be used to describe the risk of a serious loss of confidence in an organization rather than a minor decline in reputation.
What is a program risk?The risks associated with a particular business program or portfolio of projects
What is a project risk?The risks associated with a project. Risk management of projects is a relatively mature discipline that is enshrined in major project management methodologies.
What is an innovation risk?Risk that applies to innovative areas of your business such as product research. Such areas may require adapting your risk management practices to fast paced and relatively high risk activities
What is a country risk?Exposure to the conditions in the countries in which you operate such as political events and the economy
What is a quality risk?The potential that you will fail to meet your quality goals for your products, services and business practices
What is a credit risk?The risk that those who owe you money to fail to pay. For the majority of businesses this is mostly related to accounts receivable risk.
What is an exchange rate risk?The risk that volatility in foreign exchange rates will impact the value of business transactions and assets. Many global businesses have high exposure to a basket of currencies that can add volatility to financial results such as operating margins.
What is an interest rate risk?The risk that changes to interest rates will disrupt your business. For example, interest rates may increase your cost of capital thus impacting your business model and profitability
What is a taxation risk?The potential for new tax laws or interpretations to result in higher than expected taxation. In some cases, new tax laws can completely disrupt the business model of an industry.
What is a process risk?The business risks associated with a particular process. Processes tend to be a focus of risk management as reducing risks in core business processes can often yield cost reductions and improved revenue
What is a resource risk?The chance that you will fail to meet business goals due to a lack of resources such as financing or the labour of skilled workers.
What is a political risk?The potential for political events and outcomes to impede your business.
What is a seasonal risk?A business with revenue that's concentrated in a single season such as a ski resort.
How is risk management handled in large corporations or government organisations?A documented framework is used to identify key business risks & provide a common approach across all operating divisions. Use AS ISO 31000:2018
What is a risk owner?A person or entity responsible for managing threats and vulnerabilities that they might exploit. Each risk owner should be someone for whom the risk is relevant to their job and who has the authority to do something about it.
What is risk appetite?The amount and type of risk that an organization is prepared to pursue, retain or take
What is the difference between risk tolerance and risk appetite?risk tolerance is the level of risk that an organization can accept per individual risk, whereas risk appetite is the total risk that the organization can bear in a given risk profile, usually expressed in aggregate