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Risk management

BAR Chapter 8 · Area I · Blueprint I.B.4

Every strategy carries risk, and every risk hides an opportunity. The Blueprint asks you to recall the COSO enterprise risk management framework and how it applies to environmental, social and governance risks, to use strategies against market, interest rate, currency and liquidity risk, to compare ways to manage working capital, to work out what a proposed transaction does to key measures, and to read a SWOT analysis. Blue Ridge Coffee Roasters, which buys green beans abroad and sells to cafes at home, faces all of it.

In this chapter

1. What enterprise risk management is for
2. The five components and twenty principles
3. Identifying, assessing and responding to risk
4. Applying ERM to ESG risks
5. Managing market, interest rate, currency and liquidity risk
6. Working capital strategies
7. What a proposed transaction does to key measures
8. SWOT analysis and strategic options

This chapter has 8 lessons, 52 practice MCQs with explanations and 10 simulations, plus flashcards and a recall sheet.

What this chapter covers

• COSO ERM and its use for ESG risks
• mitigating market, interest rate, currency and liquidity risk
• working capital strategy
• SWOT

Chapter 7: Investment decisions · Chapter 9: Economic and market influences