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

Marlow Pharma plc is adopting the COSO Enterprise Risk Management framework (Integrating with Strategy and Performance). The chief executive asks where risk should first be considered in the strategy process. Which statement best reflects the framework?

Under the updated COSO ERM framework, risk is integrated from strategy setting and objective formulation through to performance, rather than being bolted on afterwards. It is a management responsibility across the whole enterprise, not just internal audit or financial reporting controls.

  1. ARisk is considered only after strategy is approved, in the performance review stage
  2. BRisk should be integrated from strategy setting and business objective formulation through to performanceCorrect
  3. CRisk is the sole responsibility of the internal audit function
  4. DRisk management applies only to financial reporting controls

Explanation

The updated COSO ERM framework links risk to strategy and performance, so risk is considered when strategy is set and objectives formed, not just after. Treating it as an afterthought, audit-only or financial reporting-only reflects the older or narrower control view.

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