During the global economic recession that began in mid 2008, many companies found it diffi cult to gain enough credit in the form of short-term loans from their banks and other lenders. In some cases, this caused working capital problems as short-term cash fl ow defi cits could not be funded. Ultra-Uber Limited (UU), a large manufacturer based in an economically depressed region, had traditionally operated a voluntary supplier payment policy in which it was announced that all trade payables would be paid at or before 20 days and there would be no late payment. This was operated despite the normal payment terms being 30 days. The company gave the reason for this as ‘a desire to publicly demonstrate our social responsibility and support our valued suppliers, most of whom, like UU, also provide employment in this region’. In the 20 years the policy had been in place, the UU website proudly boasted that it had never been broken. Brian Mills, the chief executive often mentioned this as the basis of the company’s social responsibility. ‘Rather than trying to delay our payments to suppliers,’ he often said, ‘we support them and their cash flow. It’s the right thing to do.’ Most of the other directors, however, especially the fi nance director, think that the voluntary supplier payment policy is a mistake. Some say that it is a means of Brian Mills exercising his own ethical beliefs in a way that is not supported by others at UU Limited. When UU itself came under severe cash fl ow pressure in the summer of 2009 as a result of its bank’s failure to extend credit, the fi nance director told Brian Mills that UU’s liquidity problems would be greatly relieved if they took an average of 30 rather than the 20 days to pay suppliers. In addition, the manufacturing director said that he could offer another reason why the short-term liquidity at UU was a problem. He said that the credit control department was poor, taking approximately 50 days to receive payment from each customer. He also said that his own inventory control could be improved and he said he would look into that. It was pointed out to the manufacturing director that cost of goods sold was 65% of turnover and this proportion was continuously rising, driving down gross and profi t margins. Due to poor inventory controls, excessively high levels of inventory were held in store at all stages of production. The long-serving sales manager wanted to keep high levels of finished goods so that customers could buy from existing inventory and the manufacturing director wanted to keep high levels of raw materials and work-in-progress to give him minimum response times when a new order came in. One of the non-executive directors (NEDs) of UU Limited, Bob Ndumo, said that he could not work out why UU was in such a situation as no other company in which he was a NED was having liquidity problems. Bob Ndumo held a number of other NED positions but these were mainly in service-based companies. Required:
(b) Defi ne ‘risk embeddedness’ and explain the methods by which risk awareness and management can be embedded in organisations. (7 marks)
参考答案：
Risk embeddedness Risk embeddedness refers to the way in which risk awareness and management are interwoven into the normality of systems and culture in an organisation. These two twin aspects (systems and culture) are both important because systems describe the way in which work is organised and undertaken, and culture describes the ‘taken-for-grantedness’ of risk awareness and risk management within the organisation. The methods by which risk awareness and management can be embedded in organisations are as follows: Aligning individual goals with those of the organisation and building these in as part of the culture. The need for alignment is important because risk awareness needs to be a part of the norms and unquestioned assumptions of the organisation. Training of staff at all levels is essential to ensure risk is embedded throughout the organisation. Including risk responsibilities with job descriptions. This means that employees at all levels have their risk responsibilities clearly and unambiguously defi ned. Establishing reward systems that recognise that risks have to be taken (thus avoiding a ‘blame culture’). Those employees that are expected to take risks (such as those planning investments) should have the success of the projects included in their rewards. Establishing metrics and performance indicators that monitor and feedback information on risks to management. This would ensure that accurate information is always available to the risk committee and/or board, and that there is no incentive to hide relevant information or fail to disclose risky behaviour or poor practice. A ‘suggestion box’ is one way of providing feedback to management. Communicating risk awareness and risk management messages to staff and publishing success stories. Part of the dissemination of, and creating an incentive for, good practice, internal communications is important in developing culture and continually reminding staff of risk messages.