Monitoring Test MT2C

Governance, Risk &

Ethics
P1GRE-MT2C-X13-Q

Time allowed 1.5 hours

BOTH questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor.

2013DeVry/BeckerEducationalDevelopmentCorp.

BOTH questions are compulsory and MUST be attempted

1 (a) Risk management involves the classification of risks. One such classification is:

(i) high impact, high likelihood such as the risk that contaminated
foodstuffs will enter the production process in a biscuit manufacturing
business, or, that other entrants into the market will reduce the existing
business market share or profit margins;

(ii) high impact, low likelihood such as the risk of the non-availability of a
basic element of production such as sugar, for a biscuit manufacturing
business, or, that there will be significant damage to property or injury to
employees as a result of an earthquake in Northern Europe;

(iii) low impact, low likelihood such as the risk that minor damage to
property will be caused by snow in Australia;

(iv) low impact, high likelihood such as the risk that drivers may be involved
in vehicle accidents that will leave the business temporarily without the
vehicle, or, that production employees may be ill and unable to work
temporarily.

Companies may transfer, reduce, or accept risks, or adopt some combination of

these approaches to risk.

Required:

For each of the examples given above, describe how the business might
transfer, reduce or accept the risk. (15 marks)

(b) Whilst management will typically be more aware than others in the organisation of
many risks, it is important to embed awareness at all levels so as to reduce the costs
of risk to an organisation and its members (which might be measured in financial or
non-financial terms).

Required:

Explain the concept of risk awareness and how such awareness may be
embedded at all levels of an organisation. (10 marks)

(25 marks)

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2 Shareholders occupy a position of central importance in a company because they are its legal
owners and they expect high levels of economic performance. But the company is not always
run solely for their benefit, so they contend with management and the board of directors for
control of company policies. This is where the Annual General Meeting plays an important
role in ensuring proper communication with shareholders.

Required:

(a) Explain the difference between private and institutional shareholders,

including the role of private equity and venture capital. (8 marks)

(b) Explain the term minority shareholders and the ways in which they may be
unfairly treated by the majority shareholders. (9 marks)

(c) Explain the typical provisions included within corporate governance codes
covering the rights and equitable treatment of shareholders. (8 marks)

(25 marks)

End of Question Paper

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