It had been common practice in the operations of financial institutions to separate the risk taking from the risk management functions. Thus, its front office focuses on revenue maximisation, while the risk management function focuses on loss minimisation.

A newly appointed Chief Risk Officer has said been quoted saying:

Instead of using an "offense and defence" approach to organising the front office and risk management function, the bank could switch to a "policy and policing" or "partnership" approach.

The policy and policing approach involves the risk management function establishing policies that set out the parameters within which the front office must operate. The front office's activities are then monitored by the risk management function for compliance with the policy.

The advantage of this approach versus the offense and defence approach is that it is less confrontational instead mirroring the roles of policeman and citizen.

(i) Discuss the prospects for success of this new thrust for an organisation of your choice in Zambia (not limited to the financial sector).

(ii) Assess how  the six key components under the COSO (2017) definition of ERM fit in the approach.