Assume that you are a risk management consultant. You have been hired by two businesses:
A commercial bank with branches and operations in the United States, Europe, Asia, and Africa.
A public utility company operating coal-powered and nuclear-powered power plants in Florida, California, and
Alaska.
You have been asked to make a presentation to the board of directors of both companies, as they begin the
process of setting their risk appetite for the next 3 years.
At each presentation one recalcitrant board member asks you: “Why should our company care about this whole
risk appetite thing?”
What would you say? For each, please make sure that you refer to:
Industry-specific risks; and
Potential company-specific risks (based e.g., on their location of operations, etc.).
Sample solution
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Presentation to the Board of Directors of the Commercial Bank
Introduction
Risk appetite is a crucial component of an organization’s risk management framework, guiding decision-making processes and ensuring alignment with strategic objectives. As a risk management consultant, I understand the significance of defining risk appetite, especially for a global commercial bank operating in diverse regions. Let’s delve into why your company should care about establishing its risk appetite.
Industry-Specific Risks
Commercial Banking Sector
1. Market Risk: Fluctuations in interest rates, foreign exchange rates, and equity prices can impact the bank’s financial performance.
2. Credit Risk: Default by borrowers or adverse changes in credit ratings can lead to loan losses and affect the bank’s profitability.
3. Regulatory Risk: Compliance with evolving regulatory requirements in different regions is crucial to avoid penalties and maintain a good reputation.
Company-Specific Risks
Global Operations
1. Geopolitical Risks: Operating in multiple continents exposes the bank to geopolitical uncertainties, such as trade tensions, sanctions, or political instability.
2. Currency Risk: Fluctuations in exchange rates can impact the bank’s revenues and profits due to exposure in various currencies.
3. Cultural Differences: Managing operations across different regions requires understanding cultural nuances that may affect business practices and customer relationships.
Why Should Your Company Care?
1. Strategic Alignment: Defining risk appetite ensures that the bank’s risk-taking aligns with its strategic objectives, preserving shareholder value and reputation.
2. Compliance and Reputation: Establishing risk appetite helps in complying with regulations and mitigating industry-specific risks, safeguarding the bank’s reputation.
3. Global Stability: With operations in multiple regions, understanding and managing risks proactively through defined risk appetite can enhance stability and resilience.
Presentation to the Board of Directors of the Public Utility Company
Introduction
For a public utility company operating coal-powered and nuclear-powered plants across different states, setting a clear risk appetite is essential for sustainable operations and stakeholder confidence. Let’s explore why defining risk appetite is crucial for your company.
Industry-Specific Risks
Public Utility Sector
1. Operational Risks: Safety hazards, equipment failures, or natural disasters can disrupt power generation and impact service reliability.
2. Environmental Risks: Compliance with environmental regulations, carbon emission standards, and transitioning to renewable energy sources are key challenges for the sector.
3. Supply Chain Risks: Dependence on fuel sources like coal or uranium exposes the company to supply chain disruptions and price volatility.
Company-Specific Risks
Location of Operations
1. Climate-Related Risks: Operating in Florida, California, and Alaska subjects the company to climate-related risks such as hurricanes, wildfires, or extreme weather events.
2. Regulatory Variability: Each state has specific regulations governing energy production, requiring tailored risk management strategies to ensure compliance.
3. Community Relations: Engaging with local communities and addressing their concerns regarding plant operations is crucial to maintaining a social license to operate.
Why Should Your Company Care?
1. Resilience and Reliability: Setting risk appetite enables the company to enhance resilience against operational disruptions and maintain reliable power supply for customers.
2. Sustainability Goals: Aligning risk appetite with sustainability goals helps in managing environmental risks effectively and transitioning towards cleaner energy sources.
3. Stakeholder Confidence: Clearly defining risk appetite demonstrates proactive risk management to investors, regulators, and communities, enhancing trust and credibility for the company’s operations.
In conclusion, establishing a robust risk appetite is vital for both the commercial bank and public utility company to navigate industry-specific challenges effectively, safeguard operations, and drive sustainable growth in a dynamic business environment.
