CIMA Exam CIMAPRO19-P03-1 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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Delmy

3 months 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

3 months ago

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

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Annmarie

3 months 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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3 months 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

3 months ago

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

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Francesco

3 months ago

A) Risk reports can change behaviour

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4 months ago

I think the board may be concerned it will be criticised if it does not hedge.

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