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ACCA Strategic Professional · Strategic Business Leader · The board of directors

Marlow Energy plc has a risk-intensive operating model. The board wants a committee of non-executive directors to review the company's risk appetite, monitor emerging risks and advise the board on risk strategy, while the audit committee focuses on financial reporting. Which approach does this reflect?

This reflects setting up a separate risk committee to support the board. It gives focused non-executive attention to risk appetite and emerging risks, while the board keeps ultimate responsibility and the audit committee concentrates on financial reporting.

  1. AEstablishing a separate risk committee to support the board's responsibility for riskCorrect
  2. BDelegating all responsibility for risk to the internal audit department
  3. CTransferring accountability for risk from the board to management
  4. DMerging the nomination and remuneration committees

Explanation

A separate risk committee of mainly non-executives can give dedicated attention to risk appetite and emerging risks, especially in high-risk sectors. The board remains ultimately responsible for risk, so accountability cannot be delegated to internal audit or management.

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