Question

Simons (1999) applies a Risk Exposure Calculator. It is based on the argument that risks build up in times or growth, i.e during the good times. During this time organisation's tend to place less focus on controls and management overconfident. In order to counteract this build up in risks, Simon’s argues that the organisation must enhance controls by?

Select one:

a. Avoiding/ceasing activities that may create unnecessary risk(s)

b. Establishing and maintaining a strong risk aware culture

c. Decentralising the information management environment

d. Defining clear organisational objectives

Answer 1

Answer-

The correct Option is c. Decentralising the information management environment

When companies expand quickly, local managers are often given a great deal of autonomy to make decisions. The top-level corporate managers are involved only in matters of resource allocation, goal setting, and performance reviews.

Decentralization yields many advantages. It enables local business units to respond quickly to market demands, allows more creativity and innovation, and it can enhance the motivation of managers.

The other Options a,b and d are not effectivee ways to enhance controls to counteract risks.