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

Halden Logistics has a risk register that the board reviews annually. During the year a major supplier failed and a new cyber threat emerged, yet neither appeared on the register until the next annual review. Which weakness in risk monitoring does this most directly show?

The weakness is that risk monitoring is periodic rather than continuous. Because the register is only reviewed annually, new and changing risks such as the supplier failure and cyber threat were not identified and reassessed promptly, so the board's view of risk was out of date.

  1. ARisk monitoring is not continuous, so new and changing risks are not captured and reassessed on a timely basisCorrect
  2. BThe company has used risk avoidance where risk transfer would have been more suitable
  3. CThe risk appetite is too low relative to the company's strategy
  4. DInternal audit is too independent of operational management

Explanation

Effective monitoring should be ongoing and responsive so that emerging risks and changes in existing risks are identified promptly. An annual-only review leaves the register out of date between reviews. The risk appetite and independence options do not explain why the new risks were missed.

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