Research Paper > University of South Africa - THE AIRPORT MANAGEMENT COMPANY (AMC) LTD RSK 4801RSK4801_Assignment 01_2016_SOLUTION_1.

Document Content and Description Below

University of South Africa - RSK 4801 RSK4801_Assignment 01_2016_SOLUTION_1. THE AIRPORT MANAGEMENT COMPANY (AMC) LTD Introduction The Airport Management Company Ltd (AMC) is listed on the Johanne... sburg Securities Exchange (JSE) and responsible for managing an international airport close to Johannesburg in the Gauteng Province, and seven regional airports spread across South Africa. AMC had experienced a decline in headline earnings and negative media coverage for a number of high profile events over the last two years. Governance AMC was also criticized in the last annual general meeting (AGM) by a corporate governance lobby group for not complying with the King Code of Governance with regard to risk management. The lobby group was quite vocal about the role of the audit committee, who also took responsibility for risk management oversight, and the concern that the internal audit function lacks independence as it also performed certain operational roles such as loss control and security. The board was also put under significant pressure to restructure the board and its sub-committees when it transpired that the main board were ignorant regarding the scope and impact of the events. Question 1 | [20 Marks] You have recently been appointed as Operational Risk Manager for AMC. Your first brief received from the Chief Risk Officer is to prepare an operational risk management framework for discussion and approval at the next Board Risk Committee meeting. Argue the operational risk framework that you recommend for AMC. Question 2 | [30 Marks] The Managing director has also requested you to update EXCO on the current operational risks of the company. You have agreed with the EXCO to use the following criteria to assess the risks. You have considered all the available information and decided to present the information in the following sub-headings per event (limit your answer to five events): • Event: A description of the event with the consequence or possible consequence. • Cause: The cause(s) of the event. • Impact and likelihood: Argue the values allocated for the impact and likelihood. Question 1 • No introduction to the discussion • No definition of operational risk management (ORM) and ORM framework • If you include a diagram of the ORM framework make sure that it has a title and indicate the source (reference). For Example Fig1: ORM framework from Blunden & Thirwell, 2013: 49). Make sure you refer to the diagram in your discussion. • The ORM framework comprises of the business strategy and objectives, governance, the three lines of defense, ORM policy (risk appetite and tolerance), business environment and culture and is driven by the ORM process (identification, evaluation, financing, control, monitoring and reporting). • Lack of examples from the case study Memo RSK4801-ASSIGN 1(no. 609334)-2016 10 • Listing points without discussing. The question required you to argue the operational risk framework that you recommend for AMC. Question 2 • Students did not identify events and causes correctly. The main operational risks were sometimes discussed, but the impact and likelihood were not always determined and justified. • Impact and likelihood were not adequately justified. For example an impact of 5 for spillage was set at 5 because the cost of the loss amounted to over R100m. Also show the calculations in support of the rating. [Show More]

Last updated: 1 year ago

Preview 1 out of 10 pages