FP2 1.02 Ethics In Risk Mgmt.

Because Maggie's primary goal is to get ahead in the company, she often uses questionable tactics to get a sale, which sometimes involves misleading her customers. Maggie's behavior is a risk to her employer because Maggie places more importance on personal gain than she does on: 

• business ethics. 
• her productivity. 
• social responsibility. 
• operating procedures. 

Aiden runs a medium-sized business and decides not to implement an ethics training program for his employees. Which is a potential negative consequence his business might face due to failing to manage risk in this way? 

• increased conflict 

• damaged reputation 

• reduced profit margins 

• increased salary expense 

Daniel is working in a company’s risk management department. Without ethical standards, risk management activities can sometimes occur: 

• rarely. 

• illegally. 

• at the expense of other people. 

• without a strong leader in place. 

Kai is working at an insurance company and is responsible for assessing risk for new clients. Which is an unethical activity that relates to risk management? 

• issuing bonds to raise funds for a corporation 

• withholding information from insurance underwriters 

• requesting various documents to process a loan request 

• using third-party debt collectors to obtain overdue payments 

Michelle has acquired proof that her coworker Ted has been embezzling money from the company. If Michelle fails to inform her employer about Ted's activities, what will likely occur? 

• Ted will be charged with a felony. 
• The company's financial risk will increase. 
• The company's property insurance premium will increase. 
• The government will fine the company for noncompliance. 

A health food company claims that its products will cure many diseases, but without proof of this claim. When customers realized that the claim was unfounded, the company suffered from a damaged reputation and many lawsuits. The company's behavior is considered to be: 

• favorable. 
• moral. 
• normal. 
• unethical. 

Charlotte is responsible for managing risks at her company. One goal of risk management for Charlotte is to: 

• limit losses. 

• increase expenses. 

• increase employee loyalty. 

• determine right from wrong. 

Emma is the sales manager at a retail company. She is reviewing the sales budget for the last quarter and comparing it to the actual sales figures generated during that period. Emma is using financial information in this situation to: 

• identify external economic trends. 

• analyze the impact of aging accounts. 

• establish new quality standards and benchmarks. 

• compare estimated performance with actual performance. 

To save money, an automobile manufacturer imported substandard parts resulting in engine fires. The manufacturer is now facing a class-action lawsuit which is an example of a risk associated with: 

• trade secrets. 
• service quality. 
• product safety. 
• domestic trade. 

Ava is the financial manager at a mid-sized company. To guard against intentional ethical violations, such as deliberate financial data tampering, what should Ava's organization maintain? 

• daily balance sheets.  

• audit trails of data changes. 

• hard copies of all documents.  

• an accounts receivable schedule.