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ACCA Strategic Professional · Strategic Business Leader · Managing, monitoring and mitigating risk

At Tavira Pharma, the audit committee chair says the board is responsible for determining the nature and extent of the principal risks it is willing to take, while managers are responsible for implementing the risk system. Which statement best describes the board's role in risk?

The board sets risk appetite and oversees the risk management and internal control framework, while management designs, implements and operates it. The board cannot delegate away accountability, but it should not run day-to-day controls itself.

  1. AThe board should delegate all responsibility for risk to the CRO and take no further part
  2. BThe board should only review risk after it has crystallised in financial results
  3. CThe board sets risk appetite and oversees the risk management and internal control framework, while management designs and operates itCorrect
  4. DThe board should run daily risk controls to ensure they are effective

Explanation

Governance guidance places responsibility on the board for risk appetite and for overseeing the framework, with management implementing it. Delegating everything abandons accountability, and operating daily controls confuses board and management roles.

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