LO 2: UNDERSTAND THE CONTROL OF PERFORMANCE MANAGEMENT AND INTERNAL CONTROL ENVIRONMENT FOR RISK CONTROL

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[FRM] Financial Risk Manager Assignment Questions with Answers

 
LO 2
In many smaller, unincorporated businesses such as sole traders and unlimited partnerships, the responsibility for internal controls often lies with the owners themselves. In most cases, the owners are fully engaged in the business itself, and if employees are engaged, it is usually within the capability of the owners to remain fully aware of transactions and the overall state of the business.
As organizations grow, the need for internal controls increases, as the degree of specialization increases and it becomes impossible to remain fully aware of what is going on in every part of the business.
In a limited company, the board of directors is responsible for ensuring that appropriate internal controls are in place. Their accountability is to the shareholders, as the directors act as their agents. In turn, the directors may consider it prudent to establish a dedicated internal control function. The point at which this decision is taken will depend on the extent to which the benefits of function will outweigh the costs.
The directors must pay due attention to the control environment. If internal controls are to be effective, it is necessary to create an appropriate culture and embed a commitment to robust controls throughout the organization.
 
Question 2: Answer the following questions.
a] In reference to the above given opinion, explain in your chosen organization,  what are/could be the various factors that impact responsibility centers to clearly bring out the type of responsibility each of these centers have. Also analyze the performance measures established as controls which you believe would be appropriate to monitor and evaluate the performance of each of these responsibility centers.
b] Describe the business of your chosen organization.  Briefly explain the various types of    internal controls mechanism put in place to control the operational risks in your organization.
c] Explain the role and importance of Audits in your chosen organization. Also mention the different type of Audits that exist while describing the role of Internal Audit department towards assessing adequacy of accounting systems.
[Total-20 marks]
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LO 3: UNDERSTAND THE FINANCIAL STATEMENT AND DECISION ANALYSIS, INCLUDING RISK MANAGEMENT

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FRM Assignment Questions and Answers

What’s keeping UAE businesses awake at night?

The Middle East encompasses a broad range of economic, financial, political and social risks on a regional and country-specific basis. ICAEW’s Economic Insight: Middle East is a quarterly economic forecast specifically for the finance profession, which has shared the following outlook as at Q4 2016:-

  • Risks to an already-weak oil price. Even in a more positive scenario, oil prices will not return close to the $100 per barrel (pb) averaged in 2010–2014. Our baseline forecast remains below $60pb until 2019.
  • Rising tax burden. Businesses are concerned about potential tax increases and spending cuts to shore up government finances. This could prompt lower demand, administrative burdens for businesses (a particular blow to small and medium-sized enterprises), or loss of retained earnings for future investment. Moves to boost employment of national born workers could also place a strain on business.
  • Exchange rate risk. •. While pressure on exchange rate pegs has eased, businesses remain worried about the potential impact on costs if a move to more flexible exchange rates seems likely.
  • These worries are keenest where set government budgets mean large deficits. Oman, Bahrain and Saudi are most exposed with fiscal ‘breakeven’ oil prices $30–$50pb above current levels.

“A full implementation of President-elect Trump’s policy proposals would lower oil prices by $10pb by 2020.”
Question 3:
Evaluate the above given information in terms of impact underpinning organizations in UAE requiring to  embrace for a long term effort by the government to close fiscal deficits and raise increased revenues from the non-oil economy. This could also place many pressures on businesses, particularly w.r.t higher labour costs, weaker consumer demand, and the loss of retained earnings for future investment strategies & better liquidity practices.
[15 marks]
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LO 5: UNDERSTAND THE CONTROL AND MANAGEMENT OF OPERATIONAL AND FINANCIAL RISK IN A BUSINESS

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Financial Risk Manager [FRM] Assignment Answers

Question 5: Answer the following questions.
a] In your chosen organization, explain what are the different types of businesses and financial risks faced by it in the conduct of normal business operations and the decisions involved in it?
b] What is meant by internal risk environment in an organization? Analyze the given situation below and provide your opinion as to what led to the failure of the said institution.

Case Study 1: Washington Mutual

  • 2004 :Embarked upon a lending strategy to pursue higher profits by emphasizing high risk loans
  • 2006 :High risk loans began incurring high rates of delinquency and default,
  • 2007 :Mortgage backed securities began incurring ratings downgrades and began incurring losses due to a portfolio that contained poor quality and questionable customers. (Source: Wall Street and the Financial Crisis: Anatomy of a financial collapse began incurring losses due to a portfolio that contained poor quality and fraudulent loans and securities. Its stock price dropped as shareholders lost confidence and depositors began withdrawing funds, eventually causing a liquidity crisis at the bank)
  • 2008: Seized by its regulator, the Office of Thrift Supervision (OTS) Placed in receivership with the Federal Deposit Insurance Corporation (FDIC) Sold to JPMorgan Chase for $1.9 billion.

Case Study 2 – Barings Bank

On February 26, 1995, Barings Bank (Barings) – the United Kingdom’s (UK) oldest and one of its most reputed banks – declared it was bankrupt. The bank with a total net worth of $900 mn had suffered losses in excess of $1 bn.
These losses were result of the gross mismanagement of the bank’s derivatives trading operations by Nicholas William Leeson (Leeson), the General Manager of Barings Future in Singapore (BFS).
BFS had been established to look after the bank’s Singapore International Monetary Exchange (SIMEX) trading operations. Leeson’s job was to make arbitrage profits by taking the advantage of price differences of similar contracts on the SIMEX (Singapore) and Osaka stock exchanges.      In spite of not having the authority, he traded in options and maintained un-hedged   position.   He acted beyond the scope of his job and was able to conceal his   unauthorized derivatives trading activities.
Due to the senior management’s carelessness and lack of knowledge of derivatives trading, the bank landed up in a major financial mess.
When Barings finally went into receivership on February 27, 1995, it had an outstanding notional futures position on Japanese equities and bonds of US$ 27 bn (US$ 7 bn on Nikkei 225 equity contracts and US$ 20 bn on Japanese government bond (JGB) and Euro yen contracts).
Analysts said that the situation demanded that banks the world over must tighten their internal control procedures.
c] Based on the above case study explain in your opinion the risk management instruments that could have been applied for avoiding a financial risk situation.
 [Total-30 marks]
 

 
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SURVEY OF THE INTERNATIONAL HEALTHCARE MANAGEMENT SYSTEM IN SLOVENIA

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Formative Research Proposal on International Healthcare Management System in SLOVENIA

For this coursework, you need to produce report of a survey of the healthcare system in SLOVENIA: ‘A Survey of the Healthcare System in the Slovenia’.
Although the report should focus on one specific country, make comparisons with other countries (USA, UK, Switzerland, and Finland) so as to derive a critical analysis. Statistics or other forms of concrete evidence should be presented to support the statements made in your discussions and analysis.
The report will need to cover the following two subjects of healthcare, according to the principles covered within the units. There is a practical element within each task where you need to devise solutions for certain problems. The details are as follows.
MANDATORY SOURCE: Healey B.J, Evans T.M, Introduction to Health Care Services Foundation and Challenges, ISBN 978-1-118-40793-6

  • Plus attached articles

 

  1. Healthcare Service Management
  • Describe various types of healthcare services that exist in Slovenia and explain how service providers work together and allocate resources in order to cater for the growing needs of health and social care services. Elaborate on the various key entities of the healthcare service infrastructure in the country, and discuss how any identified parts of management and leadership play an important role in the healthcare system within the country. As part of this you should make comparisons and critical judgments about the effectiveness (or otherwise) of how particular services or infrastructure are managed and organised.
  • Practical Element: Identify and evaluate structural implications, if any, and explain with justification how certain challenges can be addressed. Proposed solutions must be evidence-based, such as based on relevant secondary data, research publications, and other relevant sources. As above, aim to produce comparisons or critical assessments in support of any suggestions or solutions that you propose, giving examples or references where appropriate.

Learning Outcome Assessed:

  • Assess critically and understand the developing needs for health and social care services, and critically assess the issues, including that of an ageing population, under limited and defined resources.
  • Assess and reflect critically on the evolving needs for healthcare resources, and derive appropriate and effective evidence-based solutions for the requirements and needs of the stakeholders.
  1. Healthcare Innovation
  • Critically review the main establishments of the healthcare industry in Slovenia. Explain how they contribute to the healthcare service provision and make their respective impact or contribution to the provision of care, and make comparisons of their relative benefits and limitations. Pay special attention to sectors that may promote healthcare innovation via new technologies – give examples to explain what they are used for, how they complement or expand the provision care, and make assessments of their relative contributions to general health provision.
  • Practical Element: Provide a brief case study for the chosen country to evaluate how healthcare technology has advanced healthcare provision in certain ways, whether it be in the form of reducing costs, improving efficiency and effectiveness, or enhancing the general quality of life. If the country is currently limited in its use of healthcare technology, explain why this is the case and the opportunities that may exist as a result. Provide suitable evidence where possible to justify your analysis. For the case study, you may choose an organization in which you have direct experience or first-hand knowledge of.

Learning Outcome Assessed:

  • Assess and reflect critically on the evolving needs for healthcare resources and derive appropriate and effective evidence-based solutions for the requirements and needs of the stakeholders.
  • Assess and review critically the potential opportunities for improved efficiencies through technological solutions, and reflect on the relationship of technology to healthcare requirements, with particular reference to organisations with which one is concerned.

As part of the above present information or data in tables and use any supporting illustrations.

Formative Assessment

As the formative component of this assessment, you will need to submit an initial research
proposal which should cover the following:

  • Specify the country of your choice.
  • Outline the topics that you will investigate for each task (Healthcare Service management and Healthcare Innovation).
  • Explain your research plan, including expected research methods, sources of information, potential approaches for analysis (such as how data will be compared and analysed), schedule, etc.

MODULE LEARNING OUTCOMES ASSESSED BY THIS ASSIGNMENT:

  1. Assess critically and understand the developing needs for health and social care services, and critically assess the issues, including that of an ageing population, under limited and defined resources.
  2. Assess and appraise critically alternative funding sources for healthcare management.
  3. Assess and reflect critically on the evolving needs for healthcare resources, and derive appropriate and effective evidence-based solutions for the requirements and needs of the stakeholders.
  4. Assess and review critically the potential opportunities for improved efficiencies through technological solutions, and reflect on the relationship of technology to healthcare requirements, with particular reference to organisations with which one is concerned.

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