Self-Study
10
Overview
Finance
There are no prerequisites.

Course Description

In business, risk equates to uncertainty regarding a future outcome. The typical business is subject to a broad array of risks, including product failures, foreign currency exchange rates, floods, hail storms, and losing key employees. Some of these risks can be eliminated by purchasing insurance, but many cannot. Instead, a business must find ways to offset or avoid risks. It can also choose to selectively accept certain risks in exchange for targeted business opportunities, such as entering into a new and unexplored market. This course helps you to identify and sort through these risks and shows you how to deal with each one. In Enterprise Risk Management, you'll find answers to questions about how to mitigate and eliminate risk, as well as how to plan for it in the organization's overall structure.



Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Finance
Jun 20, 2016
There are no prerequisites.
SS3158020
184
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Recognize the benefits of risk management, the circumstances under which an organization can retain risk, the characteristics of an enterprise risk management system, and the contents of an organization's risk profile.

Chapter 2

  • Note the contents of a credit rating system, and the circumstances under which operational hedges, forward contracts, payment netting, call options, and interest rate swaptions are used.

Chapter 3

  • Identify the risk mitigation efforts that can benefit from centralized marketing management and product testing, as well as the tactics used to mitigate the risk of false marketing claims.

Chapter 4

  • Note the uses of surety bonds, as well as the available risk mitigation alternatives for late deliveries.

Chapter 5

  • Recognize the alternatives available to reduce the risks of insufficient capacity.

Chapter 6

  • Identify the risk-related benefits of offering a richer benefits package to employees, as well as the options available for offsetting a decline in employee morale.

Chapter 7

  • Identify the uses to which multiple scenario modeling and internal audits can be put, as well as how to reduce the risk of issuing financial statements that contain errors.

Chapter 8

  • Recognize which risk can be reduced by the use of a hot site, and the risk represented by portable storage media.

Chapter 9

  • Note the risk mitigation tactics related to political risk and alliance risk.

Chapter 10

  • Identify the employee notification systems that can be used in the event of an emergency, which forms of communication are the most effective, and which issues with employees may arise immediately after a disaster has occurred.

Chapter 11

  • Recognize the reasons why deductibles and co-pay are included in insurance contracts, the issues with all-perils coverage, and the circumstances under which reimbursement occurs under business interruption insurance.

Chapter 12

  • State how risk should be incorporated into analyses involving pricing, dividends, capital budgeting, and research & development.

Chapter 13

  • Identify the uses to which risk-related reports can be put, the types of leading indicators, and how to evaluate credit ratings.



Table of Contents

Chapter 1 – Risk Management Overview

Learning Objectives

Introduction

Benefits of Risk Management

The Interrelationship between Risk and Strategy

Risk Retention Strategy

Risk Analysis as an Opportunity

Special Risk Situations

Risk Management for the Enterprise

The Chief Risk Officer

Risk Management Committee

Responsibility for Risk

Risk Management by the Individual Employee

Types of Risks

The Risk Management Process Flow

Risk Rankings

Risk Quantification Issues

The Risk Profile

Special Risk Situations

Risk Planning Timeline

Risk Management Best Practices

Risk Management Themes

Biases in Risk Management

Summary

Chapter 1 – Review Questions

Chapter 2 – Treasury Risk Management

Learning Objectives

Introduction

Funding Risk

Investment Risk

Liquidity Risk

Credit Policy Risk

Credit Exposure Risk

Internal Credit Rating System

Third Party Credit Ratings

Credit Insurance

Terms Alterations

Receivables Financing

Outside Financing

Portfolio Approach to Risk

Cross-Selling Credit Exposure Risk

Credit Concentration Risk

Foreign Exchange Risk Overview

Foreign Exchange Risk Management

Take No Action

Avoid Risk

Shift Risk

Time Compression

Payment Leading and Lagging

Build Reserves

Maintain Local Reserves

Hedging

Summary

Types of Foreign Exchange Hedges

Loan Denominated in a Foreign Currency

The Forward Contract

The Futures Contract

The Currency Option

The Cylinder Option

Swaps

Netting

Interest Risk Overview

Interest Rate Risk Management

Take No Action

Avoid Risk

Asset and Liability Matching

Hedging

Types of Interest Rate Hedges

The Forward Rate Agreement

The Futures Contract

The Interest Rate Swap

Interest Rate Options

Interest Rate Swaptions

Summary

Chapter 2 – Review Questions

Chapter 3 – Sales and Marketing Risk Management

Learning Objectives

Introduction

Marketing Governance Risk

Brand Repositioning Risk

Celebrity Spokesperson Risk

False Marketing Claims Risk

Advertising Reduction Risk

Increased Marketing Cost Risk

Socioeconomic Change Risk

Product Recall Risk

Incorrect Forecasting Risk

Customer Loss Risk

Contracting Economy Risk

Summary

Chapter 3 – Review Questions

Chapter 4 – Supply Chain Risk Management

Learning Objectives

Introduction

Supply Chain Risk

Cross-Firm Effects of Supply Chain Disruptions

Supply Chain Risk Mitigation Techniques

Project Completion Risk

Shifting Risk into the Supply Chain

Summary

Chapter 4 – Review Questions

Chapter 5 – Production and Distribution Risk Management

Learning Objectives

Introduction

Capacity Failure Risk

Defective Product Risk

Loss of Distributor Risk

Summary

Chapter 5 – Review Questions

Chapter 6 – Human Resources Risk Management

Learning Objectives

Introduction

Recruitment Risk

Incorrect Hire Risk

Downsizing Risk

Worsening Employee Morale Risk

Discrimination Risk

Position Misclassification Risk

Inflated Benefits Cost Risk

Aggregation Techniques

Benefit Swaps

Benefit Limitations

Benefit Reductions and Cost Sharing

Increased Unemployment Rate Risk

Performance Incentive Plan Risk

Accidents Risk

OSHA Violations Risk

Human Resources Activities to Mitigate Risk

Summary

Chapter 6 – Review Questions

Chapter 7 – Accounting Risk Management

Learning Objectives

Introduction

Financial Statement Error Risk

Tax Return Error Risk

Budgeting Error Risk

Overpayment Risk

Overspending Risk

Use Tax Risk

Due Diligence Error Risk

Fraud Risk

Public-Company Risks

Summary

Chapter 7 – Review Questions

Chapter 8 – Information Technology and Systems Risk Management

Learning Objectives

Introduction

Data Security Risk

IT System Failure Risk

Loss of Expertise Risk

Incompatible Systems Risk

Changing Technology Risk

Catastrophic Damage Risk

GRC Software

The Use of Procedures

The Need for Procedures

The Number of Procedures to Develop

Deviations from Procedures

The Use of Controls

Summary

Chapter 8 – Review Questions

Chapter 9 – Other Risk Management Topics

Learning Objectives

Introduction

Investor Risk

Sole Proprietorship

Partnership

Corporation

C Corporation

S Corporation

Limited Liability Company

Summary

Political Risk

Alliance Risk

Reputation Risk

Summary

Chapter 9 – Review Questions

Chapter 10 – Contingency Planning

Learning Objectives

Introduction

Contingency Planning

Disaster Communications

Disaster Drills

Safety Procedures Training

Emergency Response Team

Worker Flexibility

Automatic Detection Systems

Preventive Maintenance

Boiler-Related Activities

Hazardous Materials

Mechanical Drawings

Equipment Positioning

Safe Room

Flood Mitigation Activities

Hurricane Mitigation Activities

Replacement Facilities

Summary

Chapter 10 – Review Questions

Chapter 11 – Insurance

Learning Objectives

Introduction

Insurance Policy Terms and Conditions

Deductibles

Limit of Insurance

Co-Insurance

Exclusions

Insurance Riders

Perils

Boiler and Machinery Insurance

Business Interruption Insurance

Policy Inclusions

Additional Coverages

Management Actions

Commercial Automobile Insurance

Commercial General Liability Insurance

Cyber Risk Insurance

Management Actions

Directors and Officers Liability Insurance

Management Actions

Additional Coverages

Inland Marine Insurance

Life Insurance

Political Risk Insurance

Property Insurance

Types of Property

Policy Inclusions

Policy Exclusions

Additional Coverages

Management Actions

Workers’ Compensation Insurance

Management Actions

Insurance Distribution

Insurance Company Analysis

Insurance Pricing

Managing the Cost of Insurance

Insurer Messaging

Covered Items Analysis

Double Coverage Analysis

Unlikely Payouts

Non-Comparability

Deductibles Analysis

Job Classification Analysis

Delayed Payments

Self-Funded Insurance

Captive Insurance Company

Insurance Claims Administration

Summary

Chapter 11 – Review Questions

Chapter 12 – Risk in Financial Analysis

Learning Objectives

Introduction

Price Setting

Dividend Analysis

Capital Budgeting

Research and Development Funding Analysis

Financial Leverage

Summary

Chapter 12 – Review Questions

Chapter 13 – Risk Measurements and Reports

Learning Objectives

Introduction

Core Reports

Losses Report

Incidents Report

External Risk Indicators Report

Insurance Claims Report

Cash Basis and Accrual Basis Reporting Variance

Third Party Credit Ratings

Aggregate Counterparty Exposure Report

Staff Turnover

Alliance-Related Staff Turnover

Compensation versus Benchmarks

Duration of System Downtime

Security Breaches Report

Error Rates Report

Number of Regulator Warning Letters

Customer Complaints Report

Credit Limit to Credit Usage Variance

Volume of Derivatives Trades

Bottleneck Utilization

Reporting Thresholds

Cash Forecasting

Summary

Chapter 13 – Review Questions

Review Question Answers and Rationales

Glossary

Index

Final Examination

Answer Sheet

Course Evaluation



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