Star Limited commenced its business one decade ago. There was substantial organic growth in the first five years. As a result, it capitalized the profit for acquiring a competitor. The acquisition increased the workforce by 100%. Further, it increased sales substantially and earned substantial profits. They invested their profit in a new office building two years ago. As a result of continuous investment, the company's liquidity became further weakened, and the company had to depend on a continuous overdraft facility. The office building was used not only for administration but also for storage, showroom, and sales outlet. In the meantime, the head office was unexpectedly destroyed by a fire. Commodities stored there were stolen. The company had not insured its building but received insurance compensation for inventories stolen. Since the company's liquidity has been further weakened, the company had to retrench 50% of the employees. It scaled down the business to the level of five years ago even though there is an increasing demand for their product.

Question 1

Briefly explain what does the term risk management mean. 

Question 2

Discuss who is responsible for risk management at Star Limited 

Question 3

How would the Internal audit have mitigated the difficulties caused by the mishap in the company?

Question 4

How would the external audit have mitigated the difficulties caused by the mishap in the company?

Question 5

How could the Audit committee have mitigated the difficulties caused by the mishap in the company?