Words of Wisdom:

"live your life like it is your last day" - Tomhellewell

E-Business

  • Date Submitted: 04/09/2012 09:36 AM
  • Flesch-Kincaid Score: 8.2 
  • Words: 300
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BUSINESS MODEL AND RISK MANAGEMENT
A business model is a representation of the rationale of how an organization creates, delivers and captures value. It links specific financial and non-financial measures in a logical chain with the aim of delineating hoe the firm’s activities create value. The plans laid out in a business model can be tested statistically. A business model provides the board with a long term basis against which it will measure performance and award compensation. There are several factors to consider in developing a business model for instance that the business model is strictly based on statistical analysis and definitely not management not management intuition, It is used as a tool to measure management assumptions by the board to satisfy whether or not the strategy is sound, board evaluates consistency in logic and realism of targets and statistical evidence that relationships are valid, Board should be aware of challenges which include the fact that management might take shortcuts, the management might resist scrutiny and that relevant data might be difficult to obtain.
Risk management is the process of evaluation of risk by a company and reducing exposure to the same. The committee Of Sponsoring Organizations of the Tread way Commission (COSO) has a risk management framework. This framework comprises several elements of an organizational framework which includes internal environment, objective setting, event Identification, risk assessment, risk response, control activities, communication and monitoring. The board has several responsibilities in risk management which include; determining risk tolerance of the company in consultation with management shareholders and stakeholders, evaluating the company’s strategy and business model in the context of the firms risk tolerance, ensuring the company’s commitment to operating in appropriate risk level and Satisfying itself that the management has developed necessary internal controls and that...

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