QUESTION ONE $[20]$

GlowLux Cosmetics is a well$-$established cosmetics manufacturing company with a reputation for producing a

wide range of skincare and beauty products. Headquartered in a modern facility, the company's product

portfolio includes skincare creams, lotions, serums, and makeup items. GlowLux Cosmetics operates in both

the domestic and international markets, catering to a diverse customer base.

The company prides itself on using high$-$quality ingredients and innovative formulations to create products

that promise to enhance beauty, promote healthy skin, and deliver a radiant glow. Their product line includes

$2$

anti$-$aging serums, sunscreens, moisturizers, makeup foundations, and various other cosmetic items. In recent

months, GlowLux Cosmetics has been confronted with a surge in customer complaints regarding adverse skin

reactions.

Many customers have reported experiencing skin irritations, redness, itching, and, in some

cases,pigmentation issues after using certain products from the company's skincare line.

Numerous customers have complainedabout experiencing skin irritations shortly after applying specific

skincare products. These irritations range from mild discomfort to more severe and uncomfortable reactions.

Some customers have noticed changes in their skin pigmentation, with the appearance of dark spots

and uneven skin tone after using particular products. These pigmentation issues have raised

significant concerns among customers.

Required: Explain the significance of the product liability assessments and controls in the risk management

process.

QUESTION TWO $[20]$

Discuss the concept of hedging and the use thereof in the risk evaluation and internal control process.

QUESTION THREE $[20]$

Explain the following risk phenomenon: "fraud is the deliberate action to falsify records, valuations

or transactions, generally due to dishonest behaviour".

QUESTION FOUR $[20]$

Discuss, by including examples, the concepts of risk avoidance and risk mitigation in the risk

management process.

QUESTION FIVE $[20]$

Detail how loss probability directs the management action plan and decision$-$making process.