Page 255 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Exam style questions and answers

Which of the following are methods the directors can use to increase risk
awareness and reduce liquidity risk at B? Select all that apply.

A Invest in training (for senior staff only) on liquidity risk awareness.

B Ensure that the credit controllers have targets to work towards to reduce
time taken to collect payments. Rewards such as bonuses should be
aligned to these targets.

C Show the directors commitment to risk management through good internal
communication of success stories and expectations.

D Place strict targets on inventory levels in order to reduce them to an
acceptable level.

E Ensure the 30 day supplier payment terms are strictly adhered to.

5 F is a nuclear power station based in Country Q. It has not had any safety
incidents since the 1970’s, however a campaigning group called ‘Never Nuclear’
has recently commissioned a report stating that there is a 20% chance of a
catastrophic explosion at the power station within the next decade.

The governments of two countries which neighbour Q have seized upon the
report and publically asked for the power station to be closed and
decommissioned.

The Board of F carry out regular risk assessments which they believe to be
accurate. All of these assessments show the risk of explosion to be minimal. F
values its reputation as an ethical and responsible corporate citizen. The Board
wishes to issue a response which reassures the public that risk management at
the power station is robust.

They also wish to argue that the social and environmental impact of the power
station is positive since it creates jobs and wealth for the local economy as well
as generating ‘clean power’.

Which of the following statements would be suitable to include in the
response? Select all that apply.

A The fact there has not been any safety incidents since the 1970’s shows
the power station is safe.

B The pressure group is entirely incorrect in suggesting there is a risk of
explosion.

C Inaccurate risk assessment can cause fear and unnecessary panic.

D The power station has a positive social impact since it creates jobs.

E The environmental impact of the power station is positive since it creates
clean energy.

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