Questions and Answers of Risk Management Financial

How do outcomes, causes, and risks differ, and what are the implications of confusing these?
Is the term inherent risk helpful? How could it help and/or hinder the assessment of risk?
What are the implications of moving from assessments of predefined sets of risks to using top-down objectives based on the balanced score card approach?
Contrast the advantages and disadvantages of using voting technology compared with other approaches such as those described in this case study.
What skill set or industry experience would be most valuable for a CRO to acquire?
If a Board has an audit, investment, and risk committee how should they work together and what would be an appropriate division of duties?
Should the CRO’s role be a directing or a counseling one? How would this vary in small, medium, or large companies?
What would the ideal working relationship be between the CRO and CFO?
How should the Board and CEO evaluate a CRO’s performance and contribution to the Company?
How do Key Risk Indicators help companies identify emerging risks?
How do Key Performance Indicators help companies to manage existing risks?
If measuring performance is not a component of an ERM program, what is the effect on the overall quality of the program?
How can the Board be confident in the information reported on management’s progress in responding to significant risks?
How does an ERM program help an organization to better understand their risk culture?
How would you describe TD Bank’s risk profile to a financial analyst on Wall Street?
What are the determining factors in deciding which risks TD can take?
How does TD measure the risks in their organization?
How do Zurich ERM tools help them better understand their existing and emerging risks?
How are Zurich’s risk roles and responsibilities impacting their risk culture?
Why is it important to include a Business Resilience program in your organization’s ERM program?
How is Zurich’s Capital Management program helping their ERM program?
Give some examples on how Zurich has created new value through their ERM program?
What other strategic processes are closely tied to ERM?
What three kinds of risks are identified within the City of Edmonton?
What two criteria must be balanced in a successful ERM model?
Who is responsible for dealing with and mitigating risks?
To what body must the City’s strategic risks be reported?
Do you believe that ERM will continue to evolve, and if so, how?
Do believe that risk is a two-sided coin with both upside gains and downside losses?
How is value measured in your organization and do you believe the ERM process can add new value?
Besides risk maps and value maps, what other tools and techniques are available to manage risk and make risk-informed decisions?
What are the prospects and consequences for Blue Wood if it carries on the way it has been?
Are corporate objectives and strategy important and if so, why?
Discuss why and how either an FRM (financial risk management) or an ERM framework might benefit a company like Blue Wood.
What are the main challenges in developing and implementing a risk management framework for Blue Wood? How does the ownership structure affect these challenges?
If the company is to develop a risk management framework, who should lead the process? Should a Chief Risk Officer (CRO) be appointed? If so, to whom should he/she report and have access to? How
Are there other areas where Blue Wood should consider a risk management program?
Assume that the management team has hired you to advise them on their overall risk profile and has asked you to prepare a SWOT analysis for their review and as input to the upcoming strategic
What are the main financial risk management issues that Cathy and the rest of the management team at Kilgore need to focus on?
What kind of a financial risk management strategy would you create to solve those issues?
What are the major opportunities and downside risks with the hedging framework that you suggest?
Besides hedging the Japanese manufacturer contract, how else might Kilgore effectively use financial risk management?
What factors need to be considered when integrating financial risk management into an enterprise risk management framework?
Prior to the Risk Management Information Gathering Exercise discussed earlier in the case, consider the challenges of the newly formed project team in undertaking Risk Management in such a situation.
(a) Discuss the challenges and how each of the departments might interact with and support Risk Management across the organization.(b) What are the major differences between IT and Project
(a) What do you think were the major positives of the approach undertaken with regard to the risk management information gathering exercise?(b) What do you think were the challenges and pitfalls of
What are the key challenges to the risk framework and risk approach proposed in 2011 by the risk management team?
Despite Operational Excellence providing the perfect platform to push Risk Management, discuss what the potential pitfalls may be.
Identify an emerging crime issue in your community using data available from sources such as local newspapers, online police reporting, and so forth. Frame the situation, and then identify the
Using your force field analysis, develop a cause and effect diagram for the situation.
Either using a FMECA approach or some other appropriate RCA tool, identify five risk treatment actions you would recommend to the local Chief of Police to address the issue.
How high do you assess the knowledge level of the business strategy throughout the company by the average employee? Is it your assessment that there is a robust understanding of JAA’s business
As you are aware, effective implementation of ISO 31000 involves effective design and implementation of a risk management framework and effective implementation of the risk management processes. This
Why is it important that the company be able to identify JAA’s major stakeholders?How should a company identify its stakeholders? What is meant by the concept that stakeholders select the company
What characteristics do you see in the board of directors that lend themselves to a strong tone at the top and a culture that fully embraces risk management?
If you compare the internal audit department at JAA to several that you know of currently in the marketplace, what are some of the major differences that you see at JAA that obviously have
What is your opinion of the risk (event) identification techniques in place at JAA? How do you think that the company evolved to using such techniques?
What is the linkage at JAA between the strategic objectives, context, stakeholders, and risk criteria? Support your comments with specific examples of the link in these four areas.
Why is it important that risk criteria be created as per JAA? Do you think it is possible for any reasonable risk treatment plan to be in place without creation of such criteria?
Review the risk management policy in Appendix B and describe the kinds of things that constitute a best-in-class policy.
What other types of general or specific polices can you describe to manage risks?
Why is it that “tone at the top” and a strong risk culture are critical components for a company’s success, such as what you see at JAA?
If the internal audit department did not report directly to the Audit Committee, but to the CFO, what kind of issues would this raise in your mind? Is this something that you would support? Can you
Is it important that internal audit annually reviews the company’s risk management function? What advice would you provide to a head of internal audit that was not performing such a review? Have
In many companies, it is typical for internal audit to itself perform a risk assessment which it will use for audit planning and execution purposes. Do you have any thoughts on what you see as the
Is it appropriate that internal audit provides an opinion on the integrity of work performed by the external auditors, as in the JAA case, and what do you see as pitfalls where internal audit does
What specific characteristics differentiate this external audit function from those you have seen over the past several years? How do you envision external audit fitting into JAA’s overall risk
If JAA was not using ISO 31000 and HB 436, but instead was using the COSO ERM framework and as well the new COSO internal controls framework, what challenges do you think the company would face in
Would you consider using alternative internal control frameworks and if so, which ones?
Suppose the board decided that they did not need to monitor the risks at all and that this could be delegated down to the CEO. What problems do you see occurring in future?
How would the board measure the success of their risk management?
How would the Compensation Committee use risk management in their reward and compensation process of the company?
Was it typical for middle office employees to be promoted to the front office?
When Kerviel worked in the middle office, did he show any unusual aptitude for manipulating the transaction systems?
Did DLP have any rules or disincentives designed to deter traders like Kerviel from undertaking unauthorized trading?
Why did Kerviel make such huge bets when he did not derive any personal benefit from the profits?
Had there been any previous instances or notifications of deficiencies in DLP’s controls?
Did GEDS make effective use of market risk management?
Why did financial reporting catch the fraud, not trading management, operations, or risk management?
Had there been any previous instances or notifications of deficiencies in DLP’s transaction systems?
Why did operations employees fail to validate the explanations or escalate any of the many queries relating to Kerviel’s unauthorized trades?
Did the Paris prosecutor have sufficient grounds for criminal charges against Kerviel?
Actual losses __________ the calculated level of VaR can occur: (a) Greater than (b) Less than (c) Equal to(d) Both b and c (e) All of the above.
VaR is: (a) An exact science that yields exact estimates. (b) An educated estimate of market risk. (c) A risk management tool. (d) The variability of a portfolio. (e) Both b and c.
Back-testing VaR is: (a) Not relevant. All of the underlying assumptions are correct and hold in reality. Similar assumptions are used in most financial models. (b) Extremely important. There are
Which assumption underlying VaR is the most important yet most questionable? (a) Distributional (b) Nonnegativity (c) Random walk (d) Stationarity (e) Time consistency
You may have noticed that VaR is reported as a positive number. What would a negative VaR suggest? (a) VaR is undefined. (b) Losses could be really, really bad. (c) There is a high likelihood of
Assume a portfolio is currently worth $250 million. If the portfolio has volatility of 12 percent and a holding period of 15 business days, what is the VaR estimate with 97.5 percent confidence? Now
Calculate the monthly VaR at the 99 percent and 90 percent confidence level for various market segments given below. These are average value weighted returns obtained from
What happens when markets are behaving irrationally? Do VaR estimates hold up in these types of circumstances?
How does efficient frontier analysis differ from other forms of complex risk assessment techniques?
What limitations might an analyst encounter through the use of efficient frontier analysis?
How can efficient frontier analysis results be communicated and utilized with nonmathematical decision makers?
What is your assessment of the situation?
What advice would you provide to the board of Bim Consultants?
What pitfalls should they be concerned with?
What were some of the risk sources that emerged repeatedly in evaluating the risks? How is this helpful?
How would this risk assessment aid in the decision on whether or not to proceed with the new HR strategy?
What are Jason’s options? Can he accept a risk management program that does not involve the legal department?
Do you agree with George’s arguments? Are they valid?

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