Risk and Technology Case Study Managament Accounting Information Guidelines for Assignment #1 Assignment Bibliography Cloud Comp…

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© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 1Risk and Technology Case Study Part (a) V3.0Assessment 2Case studyRisk and Audit Committee paper appendicesAppendix 1: Risk Appetite StatementThe information below is an extract from a paper presented by the CFO in the second meeting of the Risk andAudit Committee.Risk category Principles and guidance Risk appetite
Pandemic Significant uncertainty with different countrieshaving variations on regulations relating totravel, lockdowns, the opening of venues andother factors.Need to comply with health directives indifferent countries.Unable to estimate the financial and otherimpacts on the business.Moderate
Cyber and data security Clean Hotels is the holder of sensitive data,and there is a rapid evolution in societal,regulatory and media scrutiny of privacyarrangements. There is potential for financialand reputational damage due to a data breach.Low
Legal, ethical andregulatory complianceFailure to operate within contractual andregulatory requirements, or within societalexpectations, will result in loss of reputation,fines and impact Clean Hotels’ operations.Low
Health and safety Clean Hotels seeks to create authenticcustomer experiences and relationships andensure all employees return home safely.Failure to meet legislative requirements, andto operate within Clean Hotels’ policies andprocedures, can lead to death or serious injuryto customers or hotel staff.Low© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 2Risk and Technology Case Study Part (a) V3.0Risk category Principles and guidance Risk appetite
Food safety and hygiene Clean Hotels seeks to create authenticcustomer experiences and relationships.Failure to manage supply chain andpreparation and storage of food may resultin food poisoning, leading to financial andreputational damage.Low
Change The flexibility and resilience to execute changerelating to external and internal challenges.Moderate
Growth Clean Hotels is looking to increase its portfolioof hotels in the target regions. The risk hasincreased due to uncertainty relating to theCOVID-19 pandemic.High
Foreign exchange Clean Hotels operates in multiple locationswith different currencies. Variation in exchangerates will impact the profitability of hotels andthe value of hotels within consolidated financialstatements.Foreign exchange is linked to demand fortravel, so fluctuations will impact demand.Moderate
Interest rates Clean Hotels is the holder of freehold landwith debt required to operate the business andacquire land. Fluctuations in interest rates canlead to reduced profitability and cash flow.Low
Digital transformationClean Hotels seeks to innovate, implementemerging technologies to improve costmanagement and create an authentic customerexperience. Clean Hotels is willing to be a firstmover with the implementation of technology.Low© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 3Risk and Technology Case Study Part (a) V3.0Appendix 2: Risk RegisterInherent risk assessment Residual risk assessment
Risk category
Risk description
Likelihood
Consequence
Risk rating
Key controls
Likelihood
Consequence
Risk rating
A Pandemic Loss of revenue dueto regulation on travel,lockdowns and venuecapacity or openinghours.Failure to comply withhealth directivesresulting in fines and/orreputational damage.Variation in regulationand health directives ineach location leadingto increased risk.Increased risk of cyberand data security dueto increased remoteworking.Reduced availability ofcritical workforce.Likely Catastrophic Very high Non-essentialemployees are workingfrom home wherepossible avoiding therisk of cross-infection.Annual business planupdated with alldiscretionary spendingreduced to minimumpossible.Personalised trainingfor team members onregulatoryrequirements andhealth directives.Possible Major High
B Cyber anddata securityData breach (customer,employee, and othersensitive data)resulting in financialand reputationaldamage.Likely Major High IT security controlsare in place.Possible Minor Low© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 4Risk and Technology Case Study Part (a) V3.0Inherent risk assessment Residual risk assessment
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A continuouscybersecurity programis managed across thehotels (reviewed by theExecutive Committee).Adoption of the NISTcybersecurityframework.IT strategy is in place,providing a structuredapproach to CleanHotels’ managementof IT, data andcybersecurity.
C Legal, ethicaland regulatorycomplianceFailure to complywith regulatoryrequirements or failingto act in good faithwhen applyingregulation leading toa breach of societalexpectations.Likely Major High Legal counsel reviewsand approves allcontracts with liabilitycaps included, withobligations tracked inlegal database.Clean Hotels adopts aself-disclosure policyfor all regulatorybreaches.Possible Medium Moderate© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 5Risk and Technology Case Study Part (a) V3.0Inherent risk assessment Residual risk assessment
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Legal counsel reviewsall proposed legislationand updates policiesand procedures whererequired.Staff training presentedmonthly.
D Health andsafetyDeath or serious injuryto guest or hotel staff.Likely Major High Clean Hotels maintainshealth and safetyprocedures whichcomply with regulatoryrequirements.Monthly compulsorystaff training is run onhealth and safetyprocedures.Clean Hotelsmaintains access toall appropriate plantand equipment toensure it uses theright tools for the job.A safety and riskculture is embeddedwithin the Clean Hotelsgroup, ensuring allstaff have the right tospeak up and reportsafety issues.Possible Medium Moderate© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 6Risk and Technology Case Study Part (a) V3.0Inherent risk assessment Residual risk assessment
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E Food safetyand hygieneDeath or illness toguests or hotel staffdue to foodcontamination.Possible Medium Moderate Qualified food servicestaff are employed,with all staff completinga food safetyqualification.Weekly trainingprovided to all staff infood preparation andservice.Procurement contractsrequire supply chain tocomply with all foodsafety requirementswith Clean Hotels ableto completeunannounced audits.Unlikely Minimal Very Low
F Change Failure to implementtechnology effectivelyresulting in reducedprofitability and a lossof market share.Almost certain Major Very high The growing hotelchain is adopting newand emergingtechnologies to servecustomers better.Possible Medium Moderate© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 7Risk and Technology Case Study Part (a) V3.0Inherent risk assessment Residual risk assessment
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Existing legacybooking systems arebeing replaced withnew technology thatinterface with differentdevices and bookingapps for a seamlessbooking process forcustomers.Digital capabilityincreased, such asusing social networksto enhance thecustomer experience.Change management,project management,and capabilityincreased to ensureprojects are financiallyand operationallyviable, with all changeprojects required toproceed through achange managementprocess based on thesize and complexity ofthe project.© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 8Risk and Technology Case Study Part (a) V3.0Inherent risk assessment Residual risk assessment
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G Growth Failure to integrateexisting hotels and newacquisitions resulting infailure to achieve groupsynergies and meetreturn on asset targets.This strategic prioritymay be an opportunityif there are distressedhigh-quality propertiesavailable in the market.It may also be a highrisk if there isuncertainty in themarket.Almost certain Major Very high Centralised digital hubfor policies, proceduresand learning materialsto ensure single sourceof knowledge foremployees.Governance andcontrol framework withestablished delegationof authority enablingdecisions oninvestment decisionsto be made quicklyand efficiently.Established approachto investment decisionmaking and systemdevelopment requiringdecision to pass agating process (CleanHotels InvestmentReview).Possible Major High© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 9Risk and Technology Case Study Part (a) V3.0Inherent risk assessment Residual risk assessment
Risk category
Risk description
Likelihood
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Key controls
Likelihood
Consequence
Risk rating
H ForeignexchangeFluctuations in foreignexchange ratesresulting in: reduced travellerdemand andthereforeprofitability change in costs ofsource productsleading to reducedprofitability.Possible Major High Clean Hotels promoteslocally to ensure a mixof international andlocal guests.Supply chain contractsare entered into withlocal currency wherepossible.Material foreignexchange transactionsare hedged.Possible Medium Moderate
I Interest rates Increased interestrates leading toreduced profitabilityand cash flow.Possible Major High Treasury departmentsources the cheapestinterest rate availableand monitors changingrates.Treasury departmentuses interest rateswaps to fix cash flowson variable debt.Possible Minor Low
J DigitaltransformationFailure to implementdigital transformationresulting in reducedcustomer experienceand loss of revenue.Likely Major High IT strategy includesidentification, reviewand implementation ofnew technology.Possible Minor Low© 2021 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved.Page 10Risk and Technology Case Study Part (a) V3.0Appendix 3 – Risk Matrix
Almostcertain 5
Likely 4
Possible 3
AG
B
CDFH
Unlikely 2
E
Rare 11Minimal
2Minor
3Medium
4Major
5Catastrophic
LikelihoodConsequence LevelVery highHighModerateLowVery lowI J

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