The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements.

A

Ibrahim and Abdullah’s statements reflect on different approaches towards risk management. Both of these concepts are flawed, but for different reasons. Ibrahim suggests that risk management should be done at the department/functional level. This kind of risk management is indeed practiced in modern corporate governance. It helps prevent financial and operational risks associated with the enterprise. However, while the department heads could help mitigate risks associated with their respective departments, they do not hold control over the entire enterprise, and it would be left open to strategic risks. Abdullah’s suggestion that individual shareholders should oversee risk management is a suggestion motivated by an assumption that risk management cannot generate value. The truth is that risk management can generate value by making the business safer and more attractive to investors and customers, while having managers focus on value alone would make the company vulnerable and susceptible to risks in the long run.

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Academic.Tips. (2021) 'The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements'. 20 November.

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Academic.Tips. (2021, November 20). The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements. Retrieved from https://academic.tips/question/the-following-brief-conversation-took-place-between-ibrahim-and-abdulla-ibrahim-risk-management-should-be-done-at-the-departmental-functional-level-abdulla-actually-i-t/

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Academic.Tips. 2021. "The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements." November 20, 2021. https://academic.tips/question/the-following-brief-conversation-took-place-between-ibrahim-and-abdulla-ibrahim-risk-management-should-be-done-at-the-departmental-functional-level-abdulla-actually-i-t/.

1. Academic.Tips. "The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements." November 20, 2021. https://academic.tips/question/the-following-brief-conversation-took-place-between-ibrahim-and-abdulla-ibrahim-risk-management-should-be-done-at-the-departmental-functional-level-abdulla-actually-i-t/.


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Academic.Tips. "The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements." November 20, 2021. https://academic.tips/question/the-following-brief-conversation-took-place-between-ibrahim-and-abdulla-ibrahim-risk-management-should-be-done-at-the-departmental-functional-level-abdulla-actually-i-t/.

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"The following brief conversation took place between Ibrahim and Abdulla. Ibrahim: ‘Risk management should be done at the departmental/functional level’. Abdulla: ‘Actually, I think managers should not involve themselves in risk management at all but should focus on value creation; they should leave the task of managing risk to shareholders, risk management to individual shareholders and focus on creating value’. Critically examine each of the above statements." Academic.Tips, 20 Nov. 2021, academic.tips/question/the-following-brief-conversation-took-place-between-ibrahim-and-abdulla-ibrahim-risk-management-should-be-done-at-the-departmental-functional-level-abdulla-actually-i-t/.

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