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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Risk Management

Sundaram Textiles Ltd, a listed company, has identified that a sudden rise in cotton prices could hurt its margins. The board wants to treat this as a risk to be assessed alongside others such as cyber attacks and regulatory change, through one company-wide process rather than separate departmental efforts. Which approach does this describe?

The approach is Enterprise Risk Management. It treats commodity, cyber and regulatory risks through a single integrated, company-wide process tied to business objectives, instead of fragmented departmental efforts. Audit planning and budgeting serve other purposes and do not provide a holistic risk framework.

  1. AEnterprise Risk ManagementCorrect
  2. BInternal audit sampling
  3. CStatutory audit planning
  4. DAnnual budgeting

Explanation

Enterprise Risk Management looks at risks from all areas of the business in an integrated, company-wide way and links them to objectives. Internal audit, statutory audit and budgeting are not integrated risk identification frameworks, so they do not fit the described approach.

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