Alex Jewanram MU1 Assignment 2
Alex Jewanram Assignment 2
Question 2
MEMORANDUM
DATE: October 7, 20X4
TO: John Jones, CEO
FROM: Alex Jewanram, Chief Audit Executive
RE: Risks faced by CWTI
As requested, I have identified the following risks and methods required by the company to reduce or mitigate these risks to an acceptable level. Please review this so that we can discuss the issues prior to circulating to the audit committee.
a. Competition Risk:
The risk of losing customers to competitors. (This risk can be mitigated by improving our quality while driving our cost down; can be achieved by spending more money at the selection stage of logs)
The risk of having to constantly increase price year over year which can lead to loss of sales. (This can be mitigated by implementing a lean system of managing resources.)
The company may not know what effect the transporting of trees by trucks will have on the overall production versus transporting trees by river via pontoons. (This can be mitigated by research.)
2 Environmental Risk:
Business practices in forestry do not always coincide with what is acceptable; the company may suffer a loss of reputation if it is associated with activities that would not be permitted. (This risk can be reduced by research and declaration and enforcement of ethical standards.)
Harvesting trees may involve the company in controversies such as those related to deforestation. (This risk can be reduced by involvement in organizations dedicated to reforestation, for example.)
The company may be subject heavy fines by government for damaging the environment. (This risk can be mitigated by practicing environmental friendly forestry.)
3 Financial management and treasury:
The company could be exposed to high inflation rates and the potential devaluation of its investment and income. (Consideration can be given to finding methods of hedging this exposure.)
The company will have to consider the risks involved in financing the fleet of logging trucks and plant
Question 2
MEMORANDUM
DATE: October 7, 20X4
TO: John Jones, CEO
FROM: Alex Jewanram, Chief Audit Executive
RE: Risks faced by CWTI
As requested, I have identified the following risks and methods required by the company to reduce or mitigate these risks to an acceptable level. Please review this so that we can discuss the issues prior to circulating to the audit committee.
a. Competition Risk:
The risk of losing customers to competitors. (This risk can be mitigated by improving our quality while driving our cost down; can be achieved by spending more money at the selection stage of logs)
The risk of having to constantly increase price year over year which can lead to loss of sales. (This can be mitigated by implementing a lean system of managing resources.)
The company may not know what effect the transporting of trees by trucks will have on the overall production versus transporting trees by river via pontoons. (This can be mitigated by research.)
2 Environmental Risk:
Business practices in forestry do not always coincide with what is acceptable; the company may suffer a loss of reputation if it is associated with activities that would not be permitted. (This risk can be reduced by research and declaration and enforcement of ethical standards.)
Harvesting trees may involve the company in controversies such as those related to deforestation. (This risk can be reduced by involvement in organizations dedicated to reforestation, for example.)
The company may be subject heavy fines by government for damaging the environment. (This risk can be mitigated by practicing environmental friendly forestry.)
3 Financial management and treasury:
The company could be exposed to high inflation rates and the potential devaluation of its investment and income. (Consideration can be given to finding methods of hedging this exposure.)
The company will have to consider the risks involved in financing the fleet of logging trucks and plant