RSK2601 – Memo – Oct/Nov 2016 Examination
Questio Answe Explanation
n r
1 4 Internal Control – Integrated Framework (1992), defines internal control as “a process,
effected by an entity’s board of directors, management and other personnel, designed to
provide reasonable assurance regarding the achievement of objectives in the following
categories:
Effectiveness and efficiency of operations
Reliability of financial reporting
Compliance with applicable laws and regulations (Pg 10 SG) (SU1 Pg 7 Edge Notes)
2 1 The risk management framework is a basic conceptual structure used to address the risks
faced by an organization. The purpose of the risk management framework is to assist an
organization in integrating risk management into its management process so that it
becomes a routine activity (Pg 11 SG) (SU1 Pg 8 Edge Notes)
3 1 Taking and managing risk is the essence of business survival and growth (Pg 8 SG) (SU1 Pg
4)
4 2 Risk: Uncertainty associated with a future outcome or event (Pg 7 & 140 SG) (SU1 Pg 3
Edge Notes)
5 3 The effective management of risks and opportunities is increasingly seen as an important
competitive differentiator, helping businesses achieve success despite difficult economic
times. Businesses continuously explore and develop opportunities to sustain earnings and
drive long-term increases in shareholder value. It is acknowledged that in their daily
activities, businesses are exposed to various risks and that it is necessary to take certain
risks to maximize business opportunities. The Board has the overall responsibility to
operate an effective risk and opportunity management system that ensures
comprehensive and consistent management of all significant risks and opportunities. (Pg 8
SG) (SU1 Pg 4 Edge Notes)
6 2 Options A, B and C are correct.
7 2 Davies avoids risk by nor buying a stake in the oil company
8 1 Corporate governance is the framework of rules and practices by which a board of
directors ensures accountability, fairness and transparency in a company's relationship
with all its stakeholders (financiers, customers, management, employees, government and
the community) (Pg 10 SG) (SU2 Pg 9 Edge Notes)
9 3 For an enterprise to achieve and aspire to be a good corporate citizen, it has to empower
the board of directors to:
Disclose all practices and understand the importance of a relationship between the
board and the community report annually on social, transformation, safety, ethics,
health and environmental management policies and practices;
Report on their HIV/Aids strategic plans and policies;
Disclose its formal procurement policies;
Develop and implement a clearly stated code of ethics, and
Implement the above by complying with the principles of reliability, relevance, clarity,
comparability, time lines and verifiability. (Pg 19 SG) (SU2 Pg 13 Edge Notes)
10 2 All Members should be independent non-executive directors. Option a is not an
insufficiency
, RSK2601 – Memo – Oct/Nov 2016 Examination
11 4 A triple bottom-line principle, which takes into account the environmental, economic and
social activities of a company. (Pg 16 SG) (SU2 Pg 11 Edge Notes)
12 4 Impacts the following business areas:
Employing assets efficiently:
- Effective corporate governance promotes efficient use of resources within a firm
and the larger economy
- Makes it possible to replace managers who do not put scarce resources to efficient
use
Attracting lower-cost capital:
- By improving the confidence of domestic and international investor
- Change = constant and corporate managers should continually revise strategies to
meet these changes.
Meeting social obligations:
- Laws and regulations
- Expectations of the societies
- Need to ensure the adherence to legislation
Overall performance:
- Effective corporate governance gives managers a holistic view of the organization
and holds managers and the board accountable for the management of corporate
assets
- Will improve the likelihood that managers will focus on improving the performance
of the enterprise
- If they don’t, they will be replaced.
(Pg 14 & 15 SG) (SU2 Pg 9 & 10 Edge Notes)
13 2 Risk principles (Pg 18 SG) (SU2 Pg 12 & 13 Edge Notes)
14 3 ESTABLISHING THE CONTEXT:
Stage 1 of the ERM process is establishing the context. It will form the foundation for all
the other stages in the ERM process. Establishing the context will deal with the business as
a whole as well as the business activities, processes and projects. This stage is used to
acquire accurate data and information about the whole business. (Pg 23 SG) (SU3 Pg 15
Edge Notes
15 1 Financial analysis tools (ratios) - Financial ratios are used to look at the financial position
and performance of a business. These ratios are used for planning, evaluation and control
purposes, to determine the financial standing of a business and to aid in the risk analysis
process.
Risk management process diagnostic - Some difficulties can be experienced when risk
management processes need to be implemented in a business. A risk management
process must be implemented through the support of the whole business and over an
extended period. Risk management processes that have already been put in place must
constantly be reviewed to establish the effectiveness of the processes in the business.
SWOT analysis-The overall performance of a business must be reviewed by looking at
the business “strengths, weaknesses, opportunities and threats
PEST analysis- The growth of the business is also an aspect to analyze when looking at
the business in its full context. The PEST analysis, which stands for “political,
economic, social and technology factors”, can be used to look at the market, in
which the business operates
Questio Answe Explanation
n r
1 4 Internal Control – Integrated Framework (1992), defines internal control as “a process,
effected by an entity’s board of directors, management and other personnel, designed to
provide reasonable assurance regarding the achievement of objectives in the following
categories:
Effectiveness and efficiency of operations
Reliability of financial reporting
Compliance with applicable laws and regulations (Pg 10 SG) (SU1 Pg 7 Edge Notes)
2 1 The risk management framework is a basic conceptual structure used to address the risks
faced by an organization. The purpose of the risk management framework is to assist an
organization in integrating risk management into its management process so that it
becomes a routine activity (Pg 11 SG) (SU1 Pg 8 Edge Notes)
3 1 Taking and managing risk is the essence of business survival and growth (Pg 8 SG) (SU1 Pg
4)
4 2 Risk: Uncertainty associated with a future outcome or event (Pg 7 & 140 SG) (SU1 Pg 3
Edge Notes)
5 3 The effective management of risks and opportunities is increasingly seen as an important
competitive differentiator, helping businesses achieve success despite difficult economic
times. Businesses continuously explore and develop opportunities to sustain earnings and
drive long-term increases in shareholder value. It is acknowledged that in their daily
activities, businesses are exposed to various risks and that it is necessary to take certain
risks to maximize business opportunities. The Board has the overall responsibility to
operate an effective risk and opportunity management system that ensures
comprehensive and consistent management of all significant risks and opportunities. (Pg 8
SG) (SU1 Pg 4 Edge Notes)
6 2 Options A, B and C are correct.
7 2 Davies avoids risk by nor buying a stake in the oil company
8 1 Corporate governance is the framework of rules and practices by which a board of
directors ensures accountability, fairness and transparency in a company's relationship
with all its stakeholders (financiers, customers, management, employees, government and
the community) (Pg 10 SG) (SU2 Pg 9 Edge Notes)
9 3 For an enterprise to achieve and aspire to be a good corporate citizen, it has to empower
the board of directors to:
Disclose all practices and understand the importance of a relationship between the
board and the community report annually on social, transformation, safety, ethics,
health and environmental management policies and practices;
Report on their HIV/Aids strategic plans and policies;
Disclose its formal procurement policies;
Develop and implement a clearly stated code of ethics, and
Implement the above by complying with the principles of reliability, relevance, clarity,
comparability, time lines and verifiability. (Pg 19 SG) (SU2 Pg 13 Edge Notes)
10 2 All Members should be independent non-executive directors. Option a is not an
insufficiency
, RSK2601 – Memo – Oct/Nov 2016 Examination
11 4 A triple bottom-line principle, which takes into account the environmental, economic and
social activities of a company. (Pg 16 SG) (SU2 Pg 11 Edge Notes)
12 4 Impacts the following business areas:
Employing assets efficiently:
- Effective corporate governance promotes efficient use of resources within a firm
and the larger economy
- Makes it possible to replace managers who do not put scarce resources to efficient
use
Attracting lower-cost capital:
- By improving the confidence of domestic and international investor
- Change = constant and corporate managers should continually revise strategies to
meet these changes.
Meeting social obligations:
- Laws and regulations
- Expectations of the societies
- Need to ensure the adherence to legislation
Overall performance:
- Effective corporate governance gives managers a holistic view of the organization
and holds managers and the board accountable for the management of corporate
assets
- Will improve the likelihood that managers will focus on improving the performance
of the enterprise
- If they don’t, they will be replaced.
(Pg 14 & 15 SG) (SU2 Pg 9 & 10 Edge Notes)
13 2 Risk principles (Pg 18 SG) (SU2 Pg 12 & 13 Edge Notes)
14 3 ESTABLISHING THE CONTEXT:
Stage 1 of the ERM process is establishing the context. It will form the foundation for all
the other stages in the ERM process. Establishing the context will deal with the business as
a whole as well as the business activities, processes and projects. This stage is used to
acquire accurate data and information about the whole business. (Pg 23 SG) (SU3 Pg 15
Edge Notes
15 1 Financial analysis tools (ratios) - Financial ratios are used to look at the financial position
and performance of a business. These ratios are used for planning, evaluation and control
purposes, to determine the financial standing of a business and to aid in the risk analysis
process.
Risk management process diagnostic - Some difficulties can be experienced when risk
management processes need to be implemented in a business. A risk management
process must be implemented through the support of the whole business and over an
extended period. Risk management processes that have already been put in place must
constantly be reviewed to establish the effectiveness of the processes in the business.
SWOT analysis-The overall performance of a business must be reviewed by looking at
the business “strengths, weaknesses, opportunities and threats
PEST analysis- The growth of the business is also an aspect to analyze when looking at
the business in its full context. The PEST analysis, which stands for “political,
economic, social and technology factors”, can be used to look at the market, in
which the business operates
