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ACCA Strategic Professional · Strategic Business Leader · Identification, assessment and measurement of risk

Zephyr Foods plc imports perishable goods. Its risk manager is preparing a risk register and separates each risk into the event that might occur, the cause that could trigger it, and the consequence for the business. For example, a port strike (event) caused by a pay dispute leads to spoiled stock and lost sales. Which analytical approach is the risk manager using?

The risk manager is using cause-and-effect analysis, which traces how a source of risk leads to a risk event and then to its consequences for the organisation. The other models concern industry competition, performance gaps or stakeholder influence rather than risk causation.

  1. ACause-and-effect analysis linking sources of risk to their consequencesCorrect
  2. BPorter's five forces analysis of industry rivalry
  3. CGap analysis comparing current and desired performance
  4. DStakeholder mapping using the power-interest grid

Explanation

Separating a risk into its source or cause, the event and the resulting effect is cause-and-effect analysis of risk. The other tools address industry structure, performance shortfalls or stakeholder influence, not the chain from cause to consequence.

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