Question

TOPIC: Importance of ethical behavior for senior management

Objectives : To recognize the role of chair, CEO, executive directors and non-executive directors.

ASSIGNMENT DIRECTION & REQUIREMENT/S (Identify the ILOs to be assessed at the end of each requirement. Include the rubric or marking scheme for each item/requirement.) :

You are the Company Secretary of a large UK multinational company operating in the energy sector. Your company has operations in 25 different countries, some of which are developing economies, and it has raised debt finance, as well as equity finance, in 15 of these countries. You are aware that there have been protests from environmental lobby groups in several areas regarding oil pipelines. There have also been demonstrations about the impact of operations on local communities. Your company has an internal audit committee, an audit committee, and a reasonably well-developed system of internal control loosely structured around the Turnbull Report's recommendations. However, the board has decided that perhaps it should form a new committee, a 'risk committee', which will deal with risk management and internal control specifically. Accordingly, the board has asked you to prepare a briefing paper which summarizes the main risks facing the business at present,

1. Examine the faults which were not considered while arranging the pipelines?

2. Analyze the internal and external risk as those are important to the business, and highlight where the primary exposures are likely to be?

This is all information available

Answer 1

ANSWER (1)

As per the information provided in the case study some of the faults which were not considered while arranging the pipelines are given as follows -

1. As per the information provided in the question this organization set up its operations of pipelines in developing countries. It can be treated as one of the fault of the oil company.

2. This organization did not perform environmental analysis for its operations so it became fault of the company.

3. There have been protests from environmental lobby groups in several areas regarding oil pipelines is also a fault of the company.

4. Debt finance by some of the developing countries is also one of the major fault of the organization.

5. After studying the case study we find out another fault of the company because there have also been demonstrations about the impact of operations on local communities.

ANSWER (2)

After analyze the case study we found various internal and external risks of the organization. Internal risk are those which are within the organization for example risk related to manufacturing of product and services, suppliers of the company, and other activities of the organization. According to the case study given major internal risk of the organization was debt finance by some of the developing countries. Organization should focus on each and every parameter of the internal environment. On the other hand external risks can be defined as risk of the company that are related to the external environment of the organization for example Political Environment, Economic Environment, Social Environment, Technology Environment, and Legal Environment etc. On the basis of this information we can say this organization should analyze all the internal and external factors of the environment for the effective strategies of the company.