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Could you please explain the meaning of the position of risk placed on the Heat Map below which is given in ACCA’s answer as I am not clear how they could form such Heatmap
The question and Answer are extracted from ACCA – Specimen of SBL
See page 94 of our lectures. A ‘heat map’ is just another name for risk mapping where the risks are allocated according to their impact and probability of occurring. The axis on the exam answer and the notes is the opposite way round (high/low vs low/high) but there is no standard approach.
If a risk is judged high/high then it needs immediate attention. If low/low it can be ignored or tolerated.
The ACCA answer explains why they have placed their risks in each quadrant.
Thank Sir very much. I understood now
Sir can you please tell how we can make this heat map in the exam?
You could be given a number of risks that a company had identified and be asked to write a report that classifies the risks and suggests a suitable response.
See pages 94 and 95 of our notes.