- 20 Marks
CSME – Nov 2023 – L2 – Q3 – Risk Management and Corporate Strategy
Clarify key concepts in risk management for an investor considering a new business venture.
Question
Professor Akinlabi has been teaching physics at a frontline public university in Nigeria for 30 years. He made quite some money from research grants and has over the years saved about 75 million naira, which he has been keeping in a fixed deposit facility. He complained to his friend, Dr. Albert, who is a professional accountant and expert in risk management, about the low interest rate on fixed deposits and how the high inflation rate in the country is fast eroding the real value of his savings. He is thinking of investing his savings in a poultry farm, but he is quite averse to risks.
Having tried to get some information on the diverse dimensions and dynamics of risks involved in business, he asked Dr. Albert to offer some clarifications. As Dr. Albert, you are required to offer clarifications on the following:
a. Exposure to risk and the nature of qualitative risks. (5 Marks)
b. Residual risk. (3 Marks)
c. The dynamic nature of risk assessment. (7 Marks)
d. Risk-based approach to business. (5 Marks)
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