Risk response The management would consider the alternative risk response options with transfer, avoidance, reduction and acceptance by using risk management technique and matrix. Every option would base on entity’s risk appetite, cost vs benefit of potential risk responses and the response taken will lower how many impact. Hence, management should selects and executes response based on evaluation of the portfolio of risk and responses. In the case, Leeson is doing investment without any evaluation and analysis on the risk response then act on behalf of Barings. As solution, management should done analysis on the risk faced and decide which response would be taken, then they should make notice about the decision during meeting with the staffs.
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Monitoring is completed through ongoing management activities, separate evaluations or combination of both. Ongoing evaluations used to build into business procedures at different stages and it provide timely information. Separate evaluations which conducted periodically, vary in scope and regularity depending on assessment of risks, effectiveness of ongoing evaluations and other management considerations. Effective monitoring requires active participation by the board and senior management, and strong information systems, so the date senior managers need is fed to them. However, weaknesses are recognized, the guidance stresses the importance of feedback and action. Weaknesses should be reported, assessed and their root cause amended. In Barings, Leeson job is unsupervised, in this way nobody will know even he had practicing on unauthorized position so cause Barings bank bankruptcy. In practically, management should do their responsibilities by doing checking on the report prepared and supervise the staff quality of performance to measure it is within the requirements. In fact, enterprise risk management will not strict by a serial of process, where only one factor affects only the next. It is a multidirectional, iterative process in which almost any company and does influence another. Enterprise risk management has been promoted for years as vital activity. Most business case for comprehensive risk …show more content…
To sustain an effective system of internal control, the company should carry out a detail review on risk regularly. Just like in Barings cases, if the management would carry on some evaluation toward Nick Leeson job and risk faced frequently, may be Barings bank would not liable to the significant amount of losses. Moreover, management is responsible for establishing and maintaining the internal control system within the company. Internal controls could help management mitigate the risk effectively in order to achieve the objectives of the
Monitoring is completed through ongoing management activities, separate evaluations or combination of both. Ongoing evaluations used to build into business procedures at different stages and it provide timely information. Separate evaluations which conducted periodically, vary in scope and regularity depending on assessment of risks, effectiveness of ongoing evaluations and other management considerations. Effective monitoring requires active participation by the board and senior management, and strong information systems, so the date senior managers need is fed to them. However, weaknesses are recognized, the guidance stresses the importance of feedback and action. Weaknesses should be reported, assessed and their root cause amended. In Barings, Leeson job is unsupervised, in this way nobody will know even he had practicing on unauthorized position so cause Barings bank bankruptcy. In practically, management should do their responsibilities by doing checking on the report prepared and supervise the staff quality of performance to measure it is within the requirements. In fact, enterprise risk management will not strict by a serial of process, where only one factor affects only the next. It is a multidirectional, iterative process in which almost any company and does influence another. Enterprise risk management has been promoted for years as vital activity. Most business case for comprehensive risk …show more content…
To sustain an effective system of internal control, the company should carry out a detail review on risk regularly. Just like in Barings cases, if the management would carry on some evaluation toward Nick Leeson job and risk faced frequently, may be Barings bank would not liable to the significant amount of losses. Moreover, management is responsible for establishing and maintaining the internal control system within the company. Internal controls could help management mitigate the risk effectively in order to achieve the objectives of the