Question 4 (Marks: 30) Read the following case study and answer the questions that follows.

Unilever: Responsible Risk Management

Risk management is integral to Unilevers strategy and to the achievement of Unilevers long-term goals. Our success as an organisation depends on our ability to identify and exploit the opportunities generated by our business and the markets Unilever operates in. Unilever takes an embedded approach to risk management which puts risk and opportunity assessment at the core of the leadership team agenda. Unilever defines risks as actions or events that have the potential to impact our ability to achieve our objectives. Unilever identifies and mitigates downside risks such as loss of money, reputation or talent as well as upside risks such as failure to deliver strategy if it does not strengthen brand equities or grow in growing channels. Unilevers Risk Management approach is embedded in the normal course of business with a set of global Principles of Risk Management with local implementation.

Its structural elements include: Governance of Unilever, organisational structure and delegation of authority Vision, Strategy and Objectives Code of Business Principles, Code Policies and Standards Risk and Control Frameworks Performance management and operational processes execution Compliance and assurance activities.

Musts

All managers and above must implement Unilevers Principles of Risk Management as follows: Accountability: they must identify and manage the risks that relate to their role. Risk Appetite: they must determine the level of risk, after the implementation of controls, that they are prepared to accept such that there is not a significant threat to achieving their objectives. Risk Mitigation: they must put adequate controls in place, and ensure that they are operational, in order to deliver their objectives.

All members of leadership teams must: Ensure that the risk management activities, as outlined in Unilevers Risk and Control Frameworks, are being undertaken for their areas of responsibility Complete an annual holistic risk discussion during which: - Key business risks for which they are responsible are identified - How those risks are being managed is reviewed - Any gaps in their desired risk appetite are identified. Perform regular reviews and ensure risks are mitigated as desired.

All project leaders of transformational projects must, together with their teams: Identify the key risks associated with their project achieving its objectives. Prepare risk mitigation plans. Review progress with the project steering group.

Q.4.1 Explain any three principles of the King III Report that Unilever implemented. Quote from the case study to support your answer. (12)

Q.4.2 There are two approaches that Unilever could use to implementing ERM. Explain these two approaches. (8)

Q.4.3 Discuss any five principles that the risk management culture of Unilever should address. (10)