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ACCA P1 lectures P1 notes
February 1, 2016 at 10:54 pm
Mike I was listening to your lecture this morning going to work and came across the example of the lady at the McDonalds getting ‘some mild discomfort’, and luckily for me and you both, the train carriage to Imperial Wharf was fully packed and I was squished like a sardine and could not reply to tell you what I thought of your example.
Although obviously a great example for us to get our head around anticipating and mitigating risk, the way that you made your point was very conservative with the facts due to:
1) The lady affected given in the example was not driving and did not brake when the coffee spilt – she was a passenger
2) Her experience of “some discomfort” – consisted in skin grafting followed by TWO years of medical treatment.
3) Internal documents obtained from McDonald’s showed that from 1982 to 1992 the company had received more than 700 reports of people burned by McDonald’s coffee to varying degrees of severity, and had settled claims arising from scalding injuries for more than $500,000. McDonald’s quality control manager, Christopher Appleton, testified that this number of injuries was insufficient to cause the company to evaluate its practices.
Other than that, the story was entirely correct.
P.s. “A lack of awareness automatically indicates that an entity has an inappropriate risk management strategy”……so perhaps, the example given was not so much a frivolous case after all, maybe what actually happened was that the lower structures of employees at McDonalds were not aware of the overall corporate strategy in regards to risk…thus clearly proving that McDonalds lacked efficient internal controls…..If I were an auditor I would be thinking of a Disclaimer of an opinion right now
P.p.s. I passed my last exam taught by you. You done OK in that one, you should congratulate yourself!
February 2, 2016 at 4:56 am
Ok, so factually slightly flawed ( ! ) I’ll accept that. But the basic principle remains the same
Also interesting that “the restaurant case” mentioned by “nogoogboyo” in the post of June 19, 2012 lower down this page could be interpreted as contradictory to yours!
November 25, 2015 at 5:24 am
I thoroughly enjoy these lectures. Many thanks to Mr Mike. Just a small question, the risk manager heads the risk committee which is a part of the board that deals with risk strategy, how then is his role limited to implementation?
November 30, 2013 at 9:37 am
Can you please explain what exactly is TARA ?
February 11, 2015 at 10:45 am
Transfer risk to other
Accept the risk
Avoid it altogether if it is severe
October 24, 2012 at 9:09 am
I am unable to open the file i keep getting an error server not found. Kindly upload the video again.
October 24, 2012 at 9:50 am
video works fine, your PC or internet connection is behind a firewall which blocks access to the videos
June 19, 2012 at 6:52 pm
Love the lectures Mike. They’ve helped me so much with this rather boring paper. I’ll be glad to get this one out of the way.
BTW. The Winnebago (Grazinski v Winnebago) and the restaurant story (Amber Carson) are both sadly fictitious. And before you blame anyone, it wasn’t me that started the stories!!
November 30, 2011 at 12:57 pm
yes thanks a lot a good tip
November 30, 2011 at 11:26 am
Sorry for not explaining absolutely everything within the lectures ( nor within the course notes! )
ALARP, the acronym, stands for As Low As Reasonably Possible and is in effect the management of risk bearing in mind a cost / benefit consideration. Risk can be reduced to zero by avoidance, but that may deprive you of benefit. So, in accepting that risks will be present in any business environment / situation, companies can take steps to manage the risks. Clearly, by throwing money at a problem, risk can often be reduced to minimal levels. However the benefit of such reduction may well be out-weighed by the cost.
So, reduce risk to levels which qualify as ALARP
Does that help?
December 10, 2011 at 1:23 pm
November 30, 2011 at 7:46 am
its good but did not explain related and co related risk, ALARP which is an important topic,and dynamic assessment of risk by risk management,
kindly update me regarding above topics such as ALARP ,related and corelated risk,and dynamic assessment of risk
May 25, 2011 at 6:31 pm
Can’t get enough of this lecturer, makes the subject really enjoyable. Keep it up Open Tuition!
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