Risk Universe: Finance
What is the role of risk register in preparation for potential risks? How the risk weight and impact should be calculated?
Posted: Mar 2012
RISK UNIVERSE ASSET CATEGORY: FINANCE
1. Currency/ Foreign Exchange/ Interest Rate volatility: Volatility in foreign exchange/ interest rates, inflation or other macro-economic conditions exposes the organisation to economic and accounting losses (e.g. due to inability appropriately to hedge).
2. Financial controls: Inadequacy of financial controls leads to possible loss of assets, audit non-compliance, breach of regulations, fines and loss of brand and trademark value.
3. Financial misstatement: Accidental or deliberate financial misstatement leads to breach of regulations, fines and loss of brand and trademark value.
4. Forecasting/budgeting/ measurement/ cash flow management: Inaccurate forecasting/ budgeting/ production planning/ performance measurement prevents achievement of business objectives. Inability to fund the operational or financial obligations of the business.
5. Commodity pricing: Exposure to fluctuations in prices of commodity-based materials or products (e.g., sugar, aluminium) could result in reduced earnings and a shortfall from budgeted or projected earnings due to lower-than-expected selling prices or higher-than-expected input costs.
6. Counterparty Default: The organisation may be exposed to a counterparty that is unable to fulfill its obligations.
7. Capital Availability: The organisation’s credit rating or ability to attract investors may be insufficient to obtain capital at an economic rate.
8. Inventory theft/ fraud: Theft of inventory/ cash by employees/third parties prevents achievement of business plan objectives
9. Valuation: Inaccurate valuation of assets prevents achievement of business goals
Risk Register as a Tool of Risk Management
Risk Universe: People Assets
Risk Universe: Product and Marketing Assets
Risk Universe: Infrastructure Assets
Risk Universe: Information Assets
Risk Universe: Finance Assets