CIMAPRO19-P03-1 Exam - Topic 4 Question 75 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 75
Topic #: 4

JKL makes large export sales to customers in country X, whose currency fluctuates significantly against JKL's home currency JKL also makes large purchases from suppliers in countrrOC All of these transactions are in country X's currency

JKL's treasurer does not actively hedge currency risks because there is a natural hedge in place due to the company making both sales and purchases in the same currency

JKL's board has instructed the treasurer to put active hedging measures in place because the risk report would otherwise have to disclose the fact that JKL has a currency risk which is not actively hedged

Which of the following statements are correct? Select ALL that apply.

ARisk reports can change behaviour

BRisk reporting is a bad thing

CThe board may be concerned it will be criticised if it does not hedge

DThe board does not want to be blamed for ignoring a risk.

ERisk reporting drives the whole risk management process

Show Suggested Answer

Suggested Answer: A, C, D

by Rosalia at Aug 28, 2024, 02:34 AM

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Giovanna

3 months ago

Not sure if risk reporting is a bad thing, though.

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Ty

3 months ago

I think the board just wants to avoid blame.

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Juan

3 months ago

Wait, is risk reporting really that impactful?

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Ahmed

4 months ago

Totally agree, the board's just covering their backs!

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Cathrine

4 months ago

Risk reports can definitely change behavior.

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Wava

4 months ago

D seems accurate too; the board likely wants to avoid any blame for overlooking risks, especially with the pressure from the treasurer.

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Queenie

4 months ago

I think C makes sense because if the board doesn't hedge, they might face criticism from stakeholders, right?

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Cecil

4 months ago

I'm not sure about B; I feel like risk reporting is generally seen as a positive thing, but maybe it depends on the context?

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Roslyn

5 months ago

I remember discussing how risk reports can influence management decisions, so I think A is definitely correct.

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Cary

5 months ago

I agree. The risk reporting seems to be the main reason the board is instructing the treasurer to implement active hedging measures.

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Vivan

5 months ago

Exactly. The board is likely concerned about potential criticism if they don't take action to mitigate the risk, even though there's a natural hedge in place.

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Erasmo

5 months ago

The risk report is the driving factor here. The board wants to avoid having to disclose the currency risk that isn't being actively managed.

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Nelida

5 months ago

Okay, let's break this down. The company has a natural hedge in place, but the board wants to implement active hedging measures. I think the key is understanding why they want to do that.

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Camellia

5 months ago

This question seems straightforward, but I want to make sure I understand the key points before selecting my answers.

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Kathryn

5 months ago

Wait, which LSA types are actually permitted in totally stubby areas? I'm a bit fuzzy on the details here.

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Tish

5 months ago

Okay, let me see... CloudFormation is used for provisioning and managing AWS resources, so I'm thinking the answer is probably related to that. I'll eliminate the options that don't sound right.

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Delmy

1 year ago

I think the board does not want to be blamed for ignoring a risk, so they are right to instruct the treasurer to put active hedging measures in place.

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Dudley

1 year ago

I believe risk reports can change behavior, so it's crucial for the board to take action.

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Annmarie

1 year ago

C and D seem like the right answers here. The board wants to avoid any potential criticism or blame for not addressing a known risk.

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Claudio

1 year ago

Well, the board is just doing their job by ensuring currency risks are actively managed. Wouldn't want them to get in trouble for not being 'risk-aware' enough.

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Lorenza

1 year ago

C) The board may be concerned it will be criticised if it does not hedge

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Moira

1 year ago

A) Risk reports can change behaviour

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Santos

1 year ago

I agree with Beckie. Risk reporting is important for transparency.

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Janine

1 year ago

Hah, the board is worried about the optics of not hedging. Gotta love how risk management can be more about impression management sometimes.

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Carri

1 year ago

Risk reporting is essential for good governance, but it shouldn't be the sole driver of risk management. The board is just trying to be proactive here.

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Nichelle

1 year ago

C) The board may be concerned it will be criticised if it does not hedge

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Francesco

1 year ago

A) Risk reports can change behaviour

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Hermila

2 years ago

The board wants to cover their own backs by putting active hedging measures in place. I guess they don't want to be the scapegoats if something goes wrong.

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