AFM333 Lecture 8: docx (9)

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM333
• Professor: clarkhampton

Document Summary

When tony hayward became ceo in 2007, he vowed to make safety his top priority. 3 types of risks: category 1 preventable risks: internal risks, arising from within the organization, that are (cid:272)o(cid:374)trolla(cid:271)le a(cid:374)d ought to (cid:271)e eli(cid:373)i(cid:374)ated or a(cid:448)oided. E(cid:373)plo(cid:455)ees" a(cid:374)d (cid:373)a(cid:374)agers" u(cid:374)authorized, illegal, unethical, incorrect, or inappropriate actions. Active prevention: monitoring operational processes and guidi(cid:374)g people"s (cid:271)eha(cid:448)iours a(cid:374)d de(cid:272)isio(cid:374)s to(cid:449)ard desired (cid:374)or(cid:373)s: category 2 strategy risks: a company voluntary accepts some risk in order to generate superior returns from its strategy. Bank accepts credit risks when it lends money: not necessarily undesirable like preventable risks. A strategy with high expected returns require the company to take on risks. Bp: cannot be managed through a rules-based control model. Natural/political disasters, financial crisis: since a company cannot prevent it from happening focus on mitigating their impact.